Downsizer Contributions – Get more into super when you sell your home!

From 1 July 2018 the ATO introduced the downsizer superannuation contribution. For people who are 65 years or older and meet the eligibility criteria, you can choose to make a contribution up to a maximum of $300,000 (each) into your superannuation from the proceeds of selling your home. The total contribution between you & your spouse can’t be greater than the total proceeds of the sale of your home. This can be transferred to the fund over multiple contributions, though all of the contributions must be received within 90 days of receiving the settlement proceeds.

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
  • the amount you are contributing is from the proceeds of selling your home where the contract of sale was entered on or after 1 July 2018
  • your home was owned by you or your spouse for 10 years or more prior to the sale
  • your home is in Australia and is not a caravan, houseboat or other mobile home
  • the proceeds (whether 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 not a pre-CGT asset (i.e. it’s still eligible if you acquired it before 20 September 1985)
  • 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 sale proceeds
  • you have not previously made a downsizer contribution to your super from the sale of another home.

If your home 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.

Some other points to note:

  • The downsizer contribution does not count towards your concessional or non-concessional contribution caps.
  • The contribution can still be made if your total super balance exceeds $1.6 million & will not affect your total super balance until 30 June.
  • If you commence a pension with this contribution, then it will count towards your transfer balance cap (the $1.6 million cap on the balance you can have in retirement phase).
  • You can only access the downsizer scheme once, so you couldn’t access the scheme again if you sold another property later on.
  • Downsizer contributions aren’t tax deductible.
  • Downsizer contributions will be taken into account for eligibility for the age pension.
  • You don’t have to purchase another home after making the downsizer contribution.

As you can see, there is a lot to consider in deciding whether to make the downsizer contribution after you sell your home.  Get in touch with your financial planner, or make contact with your accountant to ensure you get professional advice to make sure it is the best thing for you to do!