Downsizer Contribution To Super
Article written by Silvio Marinelli, Partner & Financial Planner, Highview Accounting & Financial.
New legislation has been introduced whereby individuals aged 65 or over can each make up to a $300K contribution to super upon selling their main residence, without affecting their standard contribution caps, if they owned the house for over 10 years.
- Downsizer contributions do not count towards an individual’s non concessional or concessional caps.
- No total superannuation balance restrictions apply to the contribution, therefore it’s a great way to contribute more than the allowed $1.6 million balance per person.
- The work test normally applies for voluntary contributions made in respect of people aged over 65, but for a downsizer that doesn’t apply.
- There is no age upper limit to a Downsizer contribution.
- Minimum age is 65, no maximum age limit.
- Must have been a main residence at some point.
- Contributions can’t exceed the proceeds of the sale of the qualifying dwelling, noting it must be a house and can’t be a caravan, motor home or houseboat.
- The ownership must have been held as an individual and or spouse before the disposal.
- 10-year ownership before sale must be met.
- Must provide the downsizer contribution form to the superfund prior to or at the time of the contribution.
- The contribution can only be made by an individual and can only be made in relation to the disposal of one eligible asset.
- The contribution must be made within 90 days of the settlement date of the disposal of the eligible asset.
Note, that if the property has been partly used for investment or business purposes, capital gains tax may apply to part of the sale proceeds.
EG: John & Marg have both had successful careers and both have super balances of $1.5 Million each. They want to sell their family home as it’s too big and downsize to an apartment on the Gold Coast. They will have $500K net cash after they purchase their apartment. They meet all the conditions and want to add the $250k each into their super.
If this has you thinking about your personal circumstances and you’d like further information please get in touch with Highview’s Financial Planners. Our experts can help see if this option is beneficial for you in your current circumstances.
T: 03 5990 1000
DISCLAIMER: Financial Planning is offered through our subsidiary Highview Wealth Solutions Pty Ltd T/AS Highview Accounting & Financial ABN 96 135 996 842. Highview Wealth Solutions Pty Ltd (Corporate Authorised Representative No 337009), Silvio Marinelli (Authorised Representative No 457162), Bruce Chisholm (Authorised Representative No 1235025) & D’Avery Pillay (Authorised Representative No 469915) of InterPrac Financial Planning Pty Ltd Australian Financial Services Licence No 246638.
Source: NTAA September – October 2019 News