Harry thinks he understands downsizing, but he asks Noel Whittaker for his advice.
The new downsizing legislation has been with us for almost a month and Harry thinks he understands the pros and cons, but he asks finance expert Noel Whittaker for his opinion.
I think I understand the new downsizing legislation that came into effect on 1 July, but I would love to get your take on it. Also, I keep reading about the disadvantage involved in downsizing and putting extra money in super and how that might affect eligibility for the Age Pension. I am 62, my wife is 58 and we are both working part-time. How do I gauge whether it’s a good idea to downsize?
A: Any money in superannuation is not currently assessed by Centrelink until the holder reaches pensionable age. Therefore, placing money in superannuation in your wife’s name may give you an extra few years on the Age Pension if the rules are unchanged at the time you get to the pensionable age. Just keep in mind that downsizing means you are converting an exempt asset, namely your home, into an assessable asset such as cash. I appreciate that you are still some years away from getting the Age Pension but it’s best to get advice sooner rather than later.
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Noel Whittaker is the author of Making Money Made Simple and numerous other books on personal finance. His advice is general in nature, and readers should seek their own professional advice before making any financial decisions.