Topping up your Super by “Downsizing” your Family Home
From the 1st of July this year, it is possible for retirees to make an additional contribution to their superannuation from the proceeds of “downsizing” their family home. This is a fantastic opportunity for anyone aged over 65 to top up their super balance by up to $300,000 for individuals and $600,000 for couples.
Of course, there are some rules that apply for a super contribution to qualify as a downsizer contribution;
- The person making the contribution must be 65 or over
- The contribution amount cannot exceed the proceeds of the sale of the home
- The home must have been their main residence
- The person (or their spouse) must have owned the home for at least 10 years
- The person must make a choice to treat the contribution as a downsizer contribution by providing their super fund with an approved form either before, or at the time that the contribution is made
- The contribution must be made within 90 days of settlement
- A downsizer contribution can only be made for one home
There is no actual requirement to downsize your home by purchasing another, smaller house. Upon the sale of their home, the person can move into any type of living situation that suits them, including renting or moving into a retirement village or an aged care facility.
“Downsizer Contributions” are excluded from the existing contributions caps and from the $1.6m total superannuation balance restrictions.
Please contact our office if you are in this position and considering selling your family home.
Contributed by Kerryn Groves.