Thinking of making that sea change or downsizing the family home? The Downsizer Contribution scheme can help you unlock the equity in your home while boosting your super.
If you’re 65 or older and you sell your family home, you can contribute up to $300,000 (per person) towards your super. This applies even if your super balance exceeds the A$1.6 million cap.
The program is primarily aimed at self-funded retirees and designed to help them downsize while also freeing up the equity in their homes.
Here’s how it works
The downsizer contribution scheme is intended for the family home, which means you must have owned the property for at least 10 years and used it as your primary place of residence.
There are other criteria as well, which we’ve outlined below:
- You must be aged 65 or over
- The maximum contribution per person is $300,000
- If you’re a couple selling your property, both of you can contribute into your super, up to a combined maximum of $600,000
- You must notify your super fund in advance if you’re making a downsizer contribution so that it is entered as exempt from the non-concessional contributions cap
- You cannot claim a personal tax deduction for a downsizer contribution
- If the property sells for less than $300,000 you can only contribute up to the property’s value, i.e. $250,000 if that’s what the property sold for
- You must make your downsizer contribution within 90 days of receiving the proceeds of the sale.
Visit the ATO website for more information on eligibility criteria.
Professional advice is important
The Downsizer Contribution scheme is a way to top up your super even if you are unable to contribute to superannuation due to your age, work status or the amount you have in super.
That being said, it can impact your eligibility for the government Age pension and other benefits. So it’s important to speak with a financial planner and have a proper understanding of the costs and benefits, and how it may impact your financial position.