Downsizing Contributions - 2018
From 1 July 2018, the Australian Government will introduce the Contributing the proceeds of downsizing into superannuation (downsizing) measure. This measure is part of a package of reforms to reduce pressure on housing affordability in Australia.
The purpose of this blog is to simply highlight some of the key features.
From 1 July 2018 under certain conditions a person a person will be able to contribute the proceeds of the sale of a house into their superannuation fund.
Some of the more important requirements are that the house must be the persons primary residence and must have been so for at least 10 years – the person selling the house must be over the age of 65 when the downsizing contribution is made into the superannuation fund there is no maximum age limit.
The amount that can be contributed can be up to $300 000 per individual.
These amounts paid into the superannuation fund will not affect non-concessional contribution caps – currently $100 000 per year.
Individuals with total super balances more than $1.6 million will also still be able to make these contributions into super without penalties.
This concession is only available to the sale of one primary residence and cannot be used for any subsequent sale of a primary residence.
However, this amount even though paid into super will be taken into account for the relevant tests to determine eligibility for the aged pension.
If the primary residence is sold and you have utilised this concession, there is no requirement to purchase another primary residence.
The primary residence must be a home in Australia – cannot be a caravan, houseboat, etc.
The house must be a primary residence subject to the capital gains tax exemption for these type of properties
The downsizer contribution must be paid within 90 days of receiving the proceeds of the sale of the property.
If for some reason or other payment cannot be made into the superfund within 90 days, then one can apply for extension.
The payment into super need not be in one lump sum but can be intermittent always subject to the $300 000 limit.
The limit is in fact $300 000 or the proceeds from the sale of the house, if less.
Should you want to discuss this further please feel free to give me a call.