This month’s column explains a new superannuation concession known as the “Downsizer Superannuation Concession” that became available to certain home owners who sell their ownership interest in a dwelling after June 30, 2018.
If you own a residential dwelling and are retired or planning your retirement and believe you could benefit from adding up to a maximum of $300,000 if you are a sole owner or $600,000 if you are joint owners, to your super fund balance, then this article should be of significant interest and importance to you.
Now if you are thinking this is just too good to be true, that may be so, unless you satisfy all of the following eligibility requirements, so grab a pen and see how many of the following requirements you currently satisfy or would satisfy in time if you elected to implement this strategy.
- You are 65 years old or older at the time you make a downsizer contribution and the good news is that there is no maximum age limit.
- The contribution must be an amount from the proceeds of selling your home or qualifying dwelling in Australia where the contract of sale was exchanged after June 30, 2018.
- The ownership interest, be it sole ownership, joint ownership or tenancy in common that is disposed of, or an interest in the land on which the dwelling is situated, must have been held at all times during the 10 years by you or your spouse prior to the disposal. The ownership period is generally calculated from the date of settlement of purchase to the date of settlement of sale. If your home is a caravan, houseboat or other mobile home they do not qualify as an ownership interest.
- Any capital gain or loss from the disposal of the dwelling must have qualified or would have qualified for the main residence CGT exemption in whole or in part or would have qualified if it is a pre-CGT asset i.e. acquired before September 20, 1985.
- The super contribution from the proceeds of sale, normally received at the date of settlement, must have been made to your super fund within 90 days of disposing of the dwelling, or such longer time as allowed by the Commissioner of Taxation.
- Your super fund has been provided with a completed “Downsizer Contribution into Super” form at or before the contribution is made to your super fund.
- You have not previously made a downsizer contribution, or had one made on your behalf to your super fund from the sale of another home.
- The maximum amount of an individual’s contribution is the lesser of either $300,000 or the proceeds from the sale of the interests in the dwelling.
Importance of Seeking Professional Advice
The downsizer super contribution provisions are complex and yet for many people should be considered well before reaching the age of 65 and before considering retirement or selling their home. It is also very relevant for retirees over 65 who may be considering selling their home.
Therefore it is strongly recommended that you consult your accountant or financial adviser before committing to selling your home and also make sure the downsizer super contribution is considered when planning for funding your retirement.
Due to new constraints placed on the length of diary articles, further issues you should be aware of are included in the more comprehensive article available on the PTAS Accountants website.
The content of this article is not intended to be used as professional advice and should not be used as such.
Brian Spurrell FCPA, CTA, Registered Tax Agent, is Director of Personalised Taxation & Accounting Services Pty Ltd. PO Box 143 Warrandyte 3113.
Ph: 0412 011 946