Downsizer Contributions Changes – Eligibility and Things to Look Out For
From 1 July 2022, people aged 60 years and over will be eligible to make downsizer contributions of up to $300,000 per person ($600,000 per couple) from the sale proceeds of their home into their super. Prior to 1st July 2022, the minimum age to be eligible was 65.
Downsizer contributions are super contributions that can be made from the sale proceeds of your family home or main residence. If the member meets the criteria, these contributions are not counted towards concessional or non-concessional caps unless the downsizer contribution is significantly higher than the proceeds from the sale of the house. The downsizer contribution will also not impact the member's total superannuation balance (TSB) until is re-calculated at the end of the relevant financial year. The Downsizer Contributions will count towards the member's Transfer Balance Cap (TBC) if the member is in retirement phase.
There is also no maximum age limit for downsizer contributions. The government has indicated that it will reduce the minimum age further to 55 in an attempt to increase superannuation balances and create housing availability for younger generations.
Eligibility Criteria
From 1st July 2022To be eligible for a downsizer contribution:
You will be aged 60 and over at the time you make the contribution
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 from the sale of the home is either exempt or partially exempt from Capital Gain Tax. I.e., you were eligible for the main residence exemption (or part thereof)
You provide your super fund with the downsizer contribution form either before or at the time of the contribution – find out more here
You make the downsizer contribution within 90 days of receiving the proceeds from the sale (settlement, not exchange)
You haven’t previously made a downsizer contribution. (This is a one-time deal)
Things to look out for
To ensure that you don’t miss getting access to this contribution there are a number of things to look out for:
Make sure you are 60 and over at the time of the contribution. This doesn’t mean that you can’t sell the house prior to your turning 60. You have 90 days post-settlement to deposit the downsizer contribution. If you make the contribution prior to age 60 though, it will be included as a personal contribution and included under the caps.
If the title of the house was only in the name of one spouse, this doesn’t mean that only that spouse is entitled to the contribution. The spouse not included on the title is still eligible for the $300,000 contribution.
When determining when to sell, make sure you meet the required 10-year ownership. This will usually be from settlement to settlement.
Access to the downsizer contribution is a fantastic opportunity to access increased contribution caps, especially if you already looking to downsize or a sea change. If you are unsure about how the downsizer contributions work or help with your eligibility, reach out to us now.
