Downsizing Contributions Into Superannuation

Posted On August 6, 2018

Downsizing contributions into superannuation

The new measure was introduced in an attempt to increase the affordability of housing by encouraging pensioners to sell their family home in favour of a smaller home and to enable them to make an important contribution to their superannuation balance sheets.

The contribution of the proceeds from a reduction to a pension scheme allows people over the age of 65 to contribute up to $ 300,000 of the sales proceeds of their home in their super. Also known as the slimming measure, the contributions made will not affect the calculation of your rescue contribution or balance in the year the contribution is made.

The ability to make a lump-sum contribution to your super fund without affecting your premium limits allows people to significantly increase their retirement income without the tax consequences of exceeding the coverages.

With this measure, you have access to the shares in your home, and you do not have not to buy a new home. Some people may find that having more of their assets within their super account can help with estate planning, because your super fund will be paid according to each beneficiary nomination, rather than through your will in the event of your death.

There are also tax benefits for people with a high taxable income after retirement. The ability to include up to $ 300,000 per person in a tax-free environment can be pretty convincing.

The most important thing to watch out for is the effect on your retirement pension. Once you sell your property, you are no longer a homeowner (unless you buy a new home) and therefore the assets you have released are subject to the asset test, regardless of whether you put the proceeds in super or not.

From 1 July 2018, people who exchange a contract for the sale of their main residence and are 65 years old or older may be eligible to make a downsizer contribution into their superannuation of up to $300,000 from the proceeds of selling their home.

Eligibility for the downsizer measure

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 was exchanged on or after 1 July 2018
• your home was owned by you or your spouse for ten years or more before the sale
• your home is in Australia and is not a caravan, houseboat or another 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 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 the sale, which is usually the date of settlement
• you have not previously made a downsizer contribution to your super from the sale of another home.

Written by ozLedger

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