22 December 2018
Downsizer contributions present a one-off opportunity for individuals aged 65 and older to increase their superannuation balances. Downsizer contributions can be made if you sell an eligible property and meet the other eligibility criteria.
The only eligibility criteria for the contributor are that they are 65 or older and they have not previously made a downsizer contribution from another property sale. Unlike other super contributions, the contributor does not need to meet the work test or have a total super balance of less than $1.6 million. This means you could be eligible even if you’re retired, over 75 or have more than $1.6 million in super.
The property sale
For the proceeds of a property sale to qualify for downsizer contributions the property must meet the eligibility criteria. The sale contract must be entered into on or after 1 July 2018. The property has been owned by the contributor, their spouse or former spouse for at least 10 years. The property can be owned solely, jointly or as tenants in common.
The property qualifies in whole or part for the main residence exemption for CGT purposes. This means it is possible for the sale of properties such as farms that only partially qualify for the main residence exemption to be eligible. It also means a property that is no longer your principal place of residence could qualify.
The property must be in Australia and cannot be a caravan, houseboat or other mobile home.
Downsizer contribution cap is the lessor of $300,000 or the proceeds from the sale. If you sell an eligible property for $800,000, and both you and your spouse are over 65, you could each make downsizer contributions of up to $300,000 from the proceeds.
The contribution must be made within 90 days of receiving the proceeds from the sale. You must also provide your super fund with the downsizer contribution into super form before or at the time of making the contribution.
If you are selling your home or former home and think you might qualify to make a downsizer contributions contact your Boyce accountant or your superannuation accountant to discuss.