Older Aussies going big on downsizing super contributions

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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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Written by Ben

43 Comments

Total Comments: 43
  1. 0
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    I don’t believe a word the puppet government says …
    Rules and laws change to suit their own pockets.

    There were times when super money just disappeared…

    • 0
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      Agree with you 110%, HKW.

    • 0
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      Well said HKW! Do not trust them any more than i trust banks or super companies (or insurance salesman)!

    • 0
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      Agreed. The rules can easily change and indeed will change if/when circumstances so dictate. If we have another GFC and the government we had to have is short of spending money it WILL come after average Australians. The only 2 things average citizens have of value is their home and superannuation. I’d be willing to bet that superannuation is the attack of choice.

      I’m disappointed in you Ben. Retirees do not need to be massaged to spend the family home so as to prop up negligent and corrupt governments which have no accountability and who are protected from the courts when they lie and steal from all of us whilst claiming to serve the nation with……….wait for it…..a “mandate”.

  2. 0
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    A different slant on this. Say a couple sells family home and upsizes (instead of downsizes). That is upsizes into a million $$ home. Puts as an example the $600K into the new home plus another $$ amount and then qualifies for the aged pension due to lower assets level. Any comments ??

    • 0
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      As long as you still have about $200’000 left over after buying that expensive home it is OK. But taking the $600’000 out of the first house would be difficult without selling the whole place and that is not what the Govt. has in mind.
      Living in a very modest unit but should I win the lottery I would upsize in a heartbeat and keep the concession card. But – keep dreaming!
      This downsizing caper is only good for people living in the better placed suburbs of Melbourne and Sydney (think of Mosman and Kew/Toorak).

    • 0
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      Assuming you were selling anyway and moving. What would be the extra difficulty involved in taking the $600’000 out of the first house and putting that into the new house ?? I appreciate that is not what the Govt. has in mind.

    • 0
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      johnp – that is totally acceptable at the moment, just wonder how many of us would get away with it before they change the rules again? Thanks for your idea though, good one.

    • 0
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      Thanks Cowboy
      However do you or someone else, know the answer to this question ??
      – Whether or not the downsizer amount can only be paid into superannuation accounts that are still in the accumulation phase ??
      – That is; can it go instead into an account based super pension mode ??

    • 0
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      Never really thought about it since both wife and I closed our super account a couple of years after the GFC crash when the accounts slightly recovered. We were 65 and had enough of the turbulence. A C/L Information Officer can help you there with the accurate state of affairs.

  3. 0
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    You can upsize and put your money into super too. The amount you put into super also has no bearing on the financials of the transactions.

  4. 0
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    You can upsize and put your money into super too. The amount you put into super also has no bearing on the financials of the transactions.

    • 0
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      Thanks OG. Was under the impression that once retired drawing allocated pension from super that the super principal is included in the assets test ??

    • 0
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      It is now called an accounts based pension and yes it is normally included in the assets test.

    • 0
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      So simplistically a hypothetical example for aged couple already retired could be as follows
      – withdraw from super say $1 million leaving a minimal amount
      – sell home say $600K
      – Buy $1.2 million home then have $400K left over
      – Contribute somewhat less than the $400K into super using downsizer scheme and start an old aged centrelink pension
      Wonder how that would go down and I am sure govt would have this scenario excluded somehow so the average Joe could not use that scheme
      Comments from all appreciated !!

    • 0
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      sounds like a plan johnp. I guess the people who use the anti-downsizing arguments of leaving family home, neighbourhood etc would apply these equally to your upsizing strategy.

  5. 0
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    That’s why the market here has risen while the major cessponds have stagnated… anyway – it’s more, I think – a matter of people deciding that they want to go finish their dream of living by the sea somewhere, and the extra cash is conincidental and probably put to best use in super – for tax purposes.

    Isn’t there a limit that can be put into super? Is it right that those (again) with the opportunity can gather a heap of cash and stash it and pay no income tax on earnings? On the family home, there’s already been no CGT, so two bites at the cherry?

    I smell another change in the wind..

    • 0
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      (gasps) a spelling mistake! Watch out for the Grammar Nazis…

      Word for today:-
      ‘conincidental’ (adj) – a calculated coincidence

      – (ref. politics, business, organised crime etc)….

    • 0
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      e.g. the reality that the government decree aided the minority and harmed the majority despite the blurb was conincidental…

      Anyone worked out yet that when certain people/groups demand ‘rights’ – other people have Rights as well – and that Rights, to be Rights (right?) must operate equally for all… otherwise they are privilege …

      Welcome to Around The World With Trebor -your daily fun fest with a serious slant (man – that Uncle Ho was one serious slant right there)….

    • 0
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      It’s an opportunity for self funded retirees to add to the low tax environment that is Super. Anyone on the OAP would have it counted in the Asset test by Centrelink so would likely be worse off

  6. 0
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    As I understand it, these contributions can only be paid into superannuation accounts that are still in the accumulation phase. Most people over 65 would already have converted their super into an account-based pension, so how can they take advantage of this?

    • 0
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      Thanks, marco – that’s what I was trying to ask above – but I didn’t have the correct words….

      So now ‘down-sizing’ and super addition is not for the retired, but for the soon-to-be-retired…. so ‘older Australians’ does not include those already retired…..

      I doubt any government would permit sudden investment in a super fund when the clear aim is to procure more income in retirement without paying any taxes… this government’s intention was that retirees downsize and then spend the proceeds rather than get a pension… too much in the way of cash and assets so down goes the pension and up goes their cash expenditure from their personal ‘consolidated revenue’ – another way of forcing them to sell their home to stimulate the false housing market for the vultures and also reduce government expenditure on pensions…..

      Brilliant!! So brilliant only a politician or one of their hacks could come up with it…. circles within circles…

    • 0
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      Yes Marco. I think the pollies would have put in traps and one would need to be very wary. Basically to prevent the average Joe from getting even a small benefit compared to the exorbitant obscene largesse they have put in place for themselves (cos they can)

    • 0
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      I am sure you can contribute the funds into your existing Super account, however it goes into accumulation phase rather than accumulation phase.

      At the end of the day, it all counts as assets, so the more you have in there, the less pension you could receive.

  7. 0
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    Downsizing from my old 4br home on 2acre s to a unit/small house in town/smaller block would actually COST me more money (& another mortgage), not only for the proposed home but also in stamp duty & real estate agent commission to the tune of $50,000 plus…stuck in a rut it seems considering I’m 58 soon & don’t want to work forever to pay off the mortgage! Doing better than some i guess (mortgage/debt free within the next few months). Need some good financial advice i think.

    • 0
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      You can add moving/storage of Goods and Prized Possessions.
      Trust in that there Moved Safely and Stored Safely.
      The Complete Moving Cost will not be Cheap.

    • 0
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      Depending where you move to Cheezil61. Lots of cheaper units in country NSW. There are a few around my place – $200’000 to $240’000. Not palaces but solid structures, Coles, Woolies, Aldi, doctor’s surgery chemist 5 minutes walk away. Even have a lock-up garage. I understand, coming from a house on 2 acres takes some taking in. We had 9 acres and a small house and I found myself a bit cramped in a unit, but then I was working full time. Look to country towns in coastal areas, not too hot in summer and not under 2C in the winter.

  8. 0
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    Proof of yet another good move for oldies by the LNP.
    Exactly the opposite to Labour who wanted to take money from us.

    • 0
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      Ha ha, so funny! Labor not Labour unless in England.
      You swallowed the hype apparently and voted accordingly.
      Did you follow the signs by Palmer when you looked for an address as well?

    • 0
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      For which oldies, Not a Bludger? Certainly not anyone who might otherwise qualify for a pension some time before they die! All downsizing will do is cost them benefits. Better to upsize and enjoy taxpayer-funded retirement income.

  9. 0
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    To Ben Hocking,
    The comments below state that the contribution can only be made if the super account is in the accumulation phase. Is this accurate please?

    • 0
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      You have to put it into super as if it was in the contribution phase and then start another pension. I have about 3 pensions now in the same SMSF.

    • 0
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      Hi mIKER.
      No I am not Ben, but I cut this from an article in “Cuffelinks”.
      “1. The contributor
      The person making the contribution must be age 65 or over. There is no maximum age, no work test requirement, and no requirement for the contributor to be permanently retired.”

      Here’s a link to the article: https://cuffelinks.com.au/downsizer-contributions-super/

    • 0
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      (Reply two):
      If your super is in the retirement phase, you aren’t going to gain much over simply investing the money, except for (maybe) tax savings, IF you earned over $20k not including your super income. And you will still be assessed on that money for any pension you may be able to receive same as if it was invested.

    • 0
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      To OG:
      So could that second (or what ever) super account stay in accumulation phase indefinitely? So it could be added to if any surplus income occurred?

    • 0
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      (Reply three) What about people who have retired, on a defined benefit scheme?
      As I understand it, you can’t add funds to them (and why would you – you will still get the same dollar amount return.

    • 0
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      On the Ball, yes, one can have an accumulation super account indefinitely, as well as one or more pension accounts, but there are still rules as to whether or not you can contribute after retirement.

  10. 0
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    The greed is good party is at it already and they have only been in power a few weeks.

    • 0
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      Better of two evils.

    • 0
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      Dead right OG.
      And, Floss, if you want to see real greed in action – have a look at an outfit called Industry Funds Services Ltd (IFS).
      This is a wholly controlled and funded entity(which has a number, in turn, of other wholly controlled companies) run by the various Industry Super Funds and which allows them to do all sorts of things and deploy members funds in ways not permitted by a Super Fund.
      Among union luminaries on it’s board is, one Chloe Shorten, sharing in the spread around of members funds.
      Just like Bill S in his union boss days.

    • 0
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      To Not a Bludger:
      Hush..
      If the LNP finds that out they will try to stop it. And there will go our (so far) good returns from industry funds.
      Maybe that’s what they are trying to do, as well as install their retail fund mates on industry fund boards.

    • 0
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      On the Ball is On the Money !!


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