Terry’s downsizing dilemma

Terry wants to sell his home and has questions about what to do with the money.


Q. Terry
I am a 69-year-old Disability Support Pensioner. I own my 30-year-old home outright and it is worth about $1.2m. I own a new 2017 Hyundai Tucson worth about $35,000 new and have about $40,000 savings. Can I sell my home and invest half of it ($600,000) in a superannuation fund without any effect on my pension?

A. Australians aged 65 or older can contribute up to $300,000 (or $600,000 if a couple) of the proceeds of the sale of their home into their super fund. The contribution is considered non-concessional, which means it is not taxed.

While it does count towards the transfer balance cap of $1.6 million that individuals are allowed to have in a fund, if you already have this figure, you can still add up to $300,000 to your nest egg and not be taxed extra.

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.

The extra funds are not tax deductible and they will be considered when assessing eligibility for the Age Pension.

If you are considering the downsizing option, you will have to contact your super fund to check that they accept downsizer contributions and complete a Downsizer Contribution Form.

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Disclaimer: All content on YourLifeChoices website is of a general nature and has been prepared without taking into account your objectives, financial situation or needs. It has been prepared with due care but no guarantees are provided for the ongoing accuracy or relevance. Before making a decision based on this information, you should consider its appropriateness in regard to your own circumstances. You should seek professional advice from a financial planner, lawyer or tax agent in relation to any aspects that affect your financial and legal circumstances.

Ben Hocking
Ben Hocking
Ben Hocking is a skilled writer and editor with interests and expertise in politics, government, Centrelink, finance, health, retirement income, superannuation, Wordle and sports.
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