As of January 1st 2023, the threshold for people wishing to make downsizer contributions to their superannuation was lowered from 60 years and over, to 55 years and over.
Downsizer contributions are intended to incentivise retirees to downsize from homes that no longer meet their needs and free them up for younger families. Eligible downsizers can make non-concessional contributions of up to $300,000 or $600,000 for a couple toward their super from selling their family home.
This contribution is also intended to make it easier for older Australians who have yet to have the benefit of compulsory super all their working lives to boost their super balance without incurring any tax.
How does it work?
- You have to be 55 or older when making the downsizer contribution, and you need to make it within 90 days of receiving the sale proceeds, which is usually at the date of settlement. The contribution can’t exceed the sale price.
- You, or your spouse, must have owned the property for at least 10 years leading up to the sale of the property. You can each make a downsizer contribution even if your spouse is not on the home title.
- The contribution does not count towards concessional (before tax) or non-concessional (after tax) contribution caps.
- No work test or age limits apply. The downsizer contribution isn’t subject to the $1.7 million total super balance restriction. Normally you can’t make a non-concessional contribution to your super fund if your balance is $1.7 million.
If a downsizer contribution may be in your future this year, it’s important to ensure it remains compliant by consulting with a licensed adviser or professional. We may be able to assist or point you in the right direction; so why not start a conversation with us today?
