Legislation has now passed parliament to allow individuals aged 55 and above to make downsizer contributions to their superannuation from the proceeds of selling their main residence. Previously the age limit was set at 65, then lowered to 60, before the current changes.
This provides greater flexibility for older Australians to contribute to their superannuation and may encourage individuals to downsize sooner to a home that better suits their needs, thereby freeing up the stock of larger homes for younger families.
This means that individuals can contribute an amount equal to all or part of the sale proceeds from the sale of their (or their spouse’s) main residence, up to $300,000 each into superannuation.
Downsizer contributions don't count towards any contributions caps thresholds, and can still be made when total individual superannuation balances are above the $1.7 million cap. The contribution will count towards the tax-free component.
There will still be further eligibility criteria that need to be met such as having owned the property for more than 10 years, and the property was either owned by one individual of a couple or former couple; held jointly; or as tenants-in-common.
The proceeds must be contributed to superannuation within 90 days of the settlement date, and the superannuation fund trustee will need to be notified of the special type of contribution.
You are only able to use this once in your lifetime.
We encourage you to seek personal financial advice regarding your circumstances, as this type of event can be tied into a broader strategy to meet your goals and provide you with a more favourable outcome. Note that there will be restrictions on access if you are; under the preservation age; or have met the preservation age & have not retired and remain under age 65.
The information in this article has been presented as factual information only based on parliamentary legislation (Treasury Laws Amendment (2022 Measures No. 2) Bill 2022 - refer to the Explanatory Memorandum: Chapter 5).
Comments