If you are over 55 years, you may be able to contribute up to $300,000 from the sale of your primary home to your super to boost your retirement savings.
The downsizing measure
Called a downsizer contribution, this money is not counted towards your contribution limits nor affected by the total super balance test in the financial year the contribution is made.
However, it will count towards your total super balance and total income stream transfer balance cap. The amount is included with any super balances for age pension calculations and is not tax deductible.
There is no requirement to buy a smaller home, or any home for that matter, for this measure to apply, and it applies to an individual so a couple may be entitled to contribute $600,000 in total.
Am I eligible for the downsizing measure?
Eligibility is strictly set and there are timeframes for making the contributions.
The criteria includes:
- you must be at least 55 years old
- the house sale contract must be dated 1 July 2018 or later
- you and/or your spouse owned the home for at least 10 years (date of settlement to date of sale)
- your home is in Australia
- selling a home – caravans, houseboats and other mobile homes are not eligible
- the capital gain or loss related to the sale of the home is exempt or partially exempt from Capital Gains Tax (CGT) under the main residence exemption (including if it would be entitled for homes acquired prior to 20 September 1985)
- the proceeds of only one home sale – the measure only applies to one home
- the maximum downsizer contribution is $300,000 per person (listed as an owner) OR the sale price, whichever is lower. This means that a couple can jointly contribute only the sale price if it is below their combined $600,000 downsizer limit.
The contributions must be made within 90 days of receiving the proceeds of sale (generally this means within 90 days of settlement). An extension may be possible under certain circumstances and if approved by the ATO.
Note that both spouses, if otherwise eligible, can make a downsizer contribution even if the house was only in one person’s name.
Impact for AvSuper members
If we accept a downsizer contribution and then the ATO informs us it was not eligible, we will either
- count the money as a personal (non-concessional) contribution; or
- refund the money to you if it could not have been a personal contribution at that time.
Note that if the ATO may apply financial penalties if you declared you were eligible for a downsizer contribution when you weren’t actually eligible.
Please contact our Member Advice Team if you are considering selling your home so we can discuss if the downsizing measure suits your circumstances.