Downsizing to your super
Since 1 July 2018, if you are over 65 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 65 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.
How do I make a downsizer contribution?
Making a downsizer contribution is simple – simply provide us with a completed Downsizing contribution into super form and then deposit the money into AvSuper’s bank account (details below). If we do not have the form when we process the contribution, it will be counted as a non-concessional contribution.
|Account name||AvSuper Fund|
|Reference||your member number|
How does this work for AvSuper Defined Benefit members?
To make a downsizer contribution, you must have an AvSuper accumulation account. It is easy and free to set up an AvSuper accumulation account – simply contact us or complete an application form – and it will give you investment choice, the ability to accept personal and spouse contributions, and access to affordable Voluntary Insurance Cover (in addition to your existing Corporate Cover). Note that administration and other fees apply to all accumulation accounts.
Email: firstname.lastname@example.org | Local call: 1300 128 751 | Phone: 02 6109 6888 | www.avsuper.com.au
This information is of a general nature only and does not take into account your personal objectives, situation or needs. Before making a decision about AvSuper, you should consider your own requirements and the relevant Product Disclosure Statement (PDS). For a copy call us or visit the AvSuper website, www.avsuper.com.au. AvSuper Pty Ltd (ABN 46 050 431 797, AFSL 239078) is the Trustee of the AvSuper Fund (ABN 84 421 446 069). FS0230.2 09.2020