Downsizing the family home is often part of the longer-term financial plans for many. New legislation now allows for a new super strategy.
New government legislation may mean you could consider investing the proceeds of the sale of your family home to your superannuation, depending on your age and circumstances, as a downsizer contribution.
What is a downsizer contribution?
From 1 July 2018, a person aged 65 years or older may be eligible to make a downsizer contribution of up to $300,000 to a complying superannuation fund from the proceeds of the sale of their primary residence, which they owned for 10 years or more. The contract of sale must be exchanged on or after 1 July 2018.
A downsizer contribution is not a non-concessional contribution and will not count towards any of the contribution caps. A downsizer contribution can still be made if a person has a total super balance greater than $1.6 million or if they do not meet the work test requirements. It is a once-off option and doesn’t apply to the sale of any residences in the future.
The contribution must be made within 90 days of receiving the proceeds of sale, which is usually the date of settlement. Spouses, provided they are also aged 65 years or older, can also make downsizer contributions to their own superannuation from the same proceeds, even if they are not an owner of the property.
The information provided above is of a general nature. This does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information.
Source: BT Insights