Allen wants to know how he can contribute to his superannuation using money from downsizing his principal residence.
We have owned our current home for eight years, but have continuously owned a succession of homes in Australia for over 22 years. Do we still qualify for the downsizing to superannuation scheme?
A. As part of the 2022 Budget, the federal government announced that from 1 January 2023, individuals aged 55 years or older can choose to make a downsizer contribution into their superannuation of up to $300,000 per person (or $600,000 per couple) from the proceeds of selling their home. The age limit has dropped from 65 to 60 and now to 55.
There are three main criteria to qualify.
- you have not previously made a downsizer contribution to your super from the sale of another home or from the part sale of your home
- prior to (or at the same time) as making your contribution, you must provide your fund with a ‘downsizer contributions into super form’
- the home must be in Australia, have been owned by you or your spouse for at least 10 years and the disposal must be exempt or partially exempt from capital gains tax (CGT).
So while the age eligibility has dropped, it is still a requirement that you or your spouse have owned your home for 10 years or more prior to the sale. Unfortunately, that means you will not be eligible for another two years.
For anyone else who is considering a downsizer contribution, other criteria include that the property must not be a boat, caravan or mobile home and you must make your contribution within 90 days of receiving the proceeds of the sale, which is usually the date of the settlement.
Extensions to this deadline may be granted in instances where circumstances out of your control, such as ill health or a death in the family, cause a delay.
If the home was owned only by one spouse and was sold, the spouse who did not have an ownership interest may also make a downsizer contribution, or have one made on their behalf, provided they meet all the other requirements.
For more information on making a contribution, follow these instructions provided by the Australian Taxation Office.
Are you considering making a downsizer contribution to super? Do you meet the criteria? Why not share your thoughts in the comments section below?