Over 65 and thinking of selling your home? What you need to know about the downsizer contributions cap
From 1 July 2018, there is a new contributions cap – the downsizer contributions cap. In the recent superannuation changes, a new downsizer super contribution (DSC) lets you contribute up to $300,000 each between couples (non-deductible) when selling your main residence. It may help relieve miserly super contribution reductions by recent governments and also help reduce your future tax load.
1. You must be 65 years or more.
2. You, your spouse or former spouse must have had an interest in the home for over 10 years. That interest may also include the trustee of your deceased spouses' estate.
3. Your home must be in Australia and not a caravan, houseboat or other mobile home.
4. The property at some stage was used as a main residence.
5. Your downsizer contribution must be made within 90 days of receiving the sale proceeds, unless otherwise approved by the Tax Commissioner.
6. When making it, you must give your super fund the 'downsizer contribution form'.
7. You can only make downsizer contributions to your super for one sale but you can make multiple downsizer contributions from the proceeds of a single sale. Downsizer contributions can't have been made before from selling an earlier main residence.
8. The downsizer cap is in addition to the other caps, and is available regardless of the amount of money the member already has in superannuation. (It does not matter if your total superannuation balance is over $1.6 million.)
Take care, because disposing of your home and making downsizer super contributions may adversely affect it. The Age Pension means test excludes the value of your home but your super balance is assessable once you're over Age Pension age. So if you sell your home for a downsizer super contribution, your age pension might reduce or stop completely.
If Downsizer Super Contributions interest you, please feel free to contact us to discuss.