Are you contemplating downsizing your home as part of your financial strategy? Did you know you could potentially boost your superannuation savings through downsizer contributions?
What are the options available to you?
If you are considering selling the family home as part of your longer-term financial plans, did you know that you could contribute some of the money into your superannuation account as a downsizer contribution? This does of course have some rules and depends on your age and circumstances.
Downsizer contributions
If you are aged 55 years or older (no upper age limit), you may be eligible to make a contribution of up to $300,000 each if you are a couple, into superannuation from the proceeds of the sale of your principal place of residence (PPR) as long as you have owned the home for more than 10 years.
A downsizer contribution does not count towards any other contribution caps and the work test does not have to be satisfied either. This type of contribution can only be made once and cannot be made again by selling another PPR 10 years later.
A couple can therefore, could make a downsizer contribution of $300,000 each into superannuation even if the PPR is owned just in one persons name provided they are 55 years or older and have lived in the property as their primary residence also.
Potential benefits of a downsizer contribution
- The balance that you have in superannuation doesn’t matter therefore, contribution caps don’t apply.
- The downsizer contribution is an after-tax contribution therefore no tax is paid when it goes into superannuation.
- You actually don’t need to purchase a new home
It is important to note that there are forms that need to be completed and supplied to the receiving superannuation fund. The contribution must also be made within 90 days from the date of settlement.
If you are thinking about selling your family home and would like to consider this option, contact us to arrange an appointment to discuss your options.
Written by Doug Henderson, Senior Financial Adviser at Treysta Wealth.
Disclaimer: any information we share is general in nature and does not take into account your personal situation. You should consider if the information is appropriate for your needs and, where appropriate, seek professional advice.
