Older Australians downsizing their family homes have contributed $1 billion to their superannuation funds, according to Assistant Treasurer Michael Sukkar.
In the May 2017 budget, the Government announced that from 1 July 2018, Australians aged 65 or over would be able to sell the principal residence that they have owned for at least 10 years and make a non-concessional contribution to super of up to $300,000 from the proceeds. Couples can contribute $300,000 each.
Mr Sukkar said the measures were introduced to reduce pressure on housing affordability, while also building up retirement incomes for older Australians.
The non-concessional super contributions from downsizing can be placed directly into superannuation accounts as tax has already been paid on them. They are not taxed when they are received by your super fund.
Government data from the take-up of the downsizer contribution offers showed that in one year, 4246 individuals had used the measure, 55 per cent of the contributions made by women and 45 per cent from men.
The scheme has been used in every state and territory since being introduced, with NSW leading the way (31 per cent), followed by Victoria (26 per cent) and Queensland (24 per cent).
Eligibility for the downsizer measure
You are eligible to make a downsizer contribution to super if you can answer yes to all of the following:
- you are 65 years old or older at the time you make a downsizer contribution (there is no maximum age limit)
- the amount you are contributing is from the proceeds of selling your home where the contract of sale exchanged was on or after 1 July 2018
- your home was owned by you or your spouse for 10 years or more prior to the sale – the ownership period is generally calculated from the date of settlement of purchase to the date of settlement of sale
- your home is in Australia and is not a caravan, houseboat or other mobile home
- the proceeds (capital gain or loss) from the sale of the home are either exempt or partially exempt from capital gains tax (CGT) under the main residence exemption, or would be entitled to such an exemption if the home was a CGT rather than a pre-CGT (acquired before 20 September 1985) asset
- you have provided your super fund with the Downsizer contribution into super form either before or at the time of making your downsizer contribution
- you make your downsizer contribution within 90 days of receiving the proceeds of sale, which is usually at the date of settlement
- you have not previously made a downsizer contribution to your super from the sale of another home.
Note: If the home that was sold was only owned by one spouse, the spouse that did not have an ownership interest may also make a downsizer contribution, or have one made on their behalf, provided they meet all of the other requirements.
Are you one of the 4246 older Australians who made a downsizer contribution towards your superannuation last year? What do you think of the initiative? Would it encourage your to downsize at a future date?
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