From 1 July 2018, the Australian Government is allowing certain individuals to downsize their homes and place the proceeds from the sale into their superannuation fund.

How Much
$300,000 from proceeds of selling your home. This does not count towards non-concessional contribution cap. This is an individual basis, so couples can do $300,000 each.
Eligibility (Click here for more...)
You will be 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 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 your 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.

Pros

• Does not count towards non-concessional caps
• Can still be made even when total super balance is above $1.6 million
• There is no requirement for you to purchase a new home
• Downsizer contribution limit $300,000 (each)

Cons

• Can only use for the sale of one home
• Downsizer contributions are not tax deductible
• Downsizer contributions are considered for determining eligibility for the age pension

Downsizer Contributions may not be suited to your circumstances and needs. Before making any financial decisions it’s important to carefully consider all the pros and cons. For more information, contact your superannuation fund administrator or financial planner.