If you’re looking to downsize, you may want to take advantage of the downsize contribution of up to $300,000. The eligible age changed from 1st Jan 2023 and now the minimum age is 55. This is a significant change that could offer great benefits to those looking to sell their main residence and another imperative to keep in mind when weighing up your options.
Here’s a quick recap of how it works:
- You can contribute up to $300,000 as a one-off amount to super from the proceeds of selling the main residence.
- For couples, both parties can contribute up to $600,000 if the eligibility criteria are met. However, the amount cannot exceed the sale proceeds.
- The contribution must be made within 90 days of settlement, and the individual must be 55 at the time of contribution.
- The property sold must be owned for 10 years or more and qualify for CGT exemption.
- Downsizer contributions do not count towards the non-concessional cap.
You can view the rules here on the ATO website.
While these benefits are enticing, there are still variables to consider to look at the whole picture. One of the biggest considerations is whether making a downsizer contribution will affect your Age Pension. The main residence is generally exempt from the assets and income tests for the Age Pension and DVA benefits, but superannuation is not exempt. Therefore, it’s important to seek financial advice to review your situation before selling your family home and/or making a downsizer contribution.
Making big financial desicions shouldn’t be done without due diligence. We are here to help support and guide and lay out all your options so you can make an informed choice. You can contact us here.