Topping up your super with downsizer payments
Due to new super measures introduced by the Government, Australians will now be able to contribute part of the proceeds of the sale of their home towards their superannuation.
From 1 July 2018, where the exchange of contracts of sale for a ‘main residence’ home occurs on or after 1 July 2018, individuals will be able to access the new downsizer super measure.
Eligible individuals can contribute up to $300,000 from the proceeds of selling their home into superannuation. This is not a non-concessional contribution, therefore, it will not count towards an individual’s’ contributions caps. However, it will count towards an individual’s transfer balance cap, set at $1.6 million.
There is no requirement for individuals to downsize by acquiring a smaller or another property, however, individuals must meet the following requirements to access the downsizer contribution:
- You are 65 years or older at the time of making a downsizer contribution
- The contribution amount is from the proceeds of selling your home where the contract of sale was exchanged on or after 1 July 2018
- Your home was owned for 10 years or more by you or your spouse
- The capital gain or loss from the sale is exempt or partially exempt from CGT under the main residence exemption or would be entitled to an exemption if the home was a CGT rather than pre-CGT asset
- Your home is in Australia and is not a caravan, mobile home or houseboat
- You have provided your super fund with the downsizer contribution form either before or at the time of making your contribution
- The contribution must be made within 90 days of receiving the proceeds of the sale, which is usually the date of settlement
- You have not previously made a downsizer contribution to your super from the sale of another home.
Eligible individuals may make multiple downsizer contributions from the proceeds of a single sale. However, the total of all the contributions must not exceed $300,000 or the total proceeds of the sale less any other downsizer contributions that have been made by your spouse.
Before making a downsizer contribution, check you first meet the eligibility requirements and contact your super fund/s to check that they accept downsizer contributions.
The ATO may issue false and misleading penalties if an ineligible individual makes a downsizer contribution and incorrectly declares they were eligible to make the contribution.