Downsizer contributions allow eligible individuals to contribute some or all of the proceeds of the sale of their home to super. Unlike after-tax contributions to super, downsizer contributions do not have a total super balance limit, or an upper age limit. This means it could be a great, final way to boost super for those who don’t meet other eligibility rules to contribute.
Outlined below is a brief explanation of some of the key changes and how you could benefit.
From 1 July 2022, the eligibility age is reducing from 65 to 60. The age reduction increases the number of individuals who may be eligible to make a downsizer contribution and boost their retirement savings.
Whether you’re thinking about retirement, or already retired, there are also other changes creating new and expanded opportunities for individuals aged 67-74. You can read about these changes in our article here.
What’s the limit?
Provided certain other conditions are met, it may be possible to contribute up to $300,000 per person (or $600,000 per couple) from the proceeds of selling your home.
Downsizer contributions won’t count towards your concessional or non-concessional contribution caps.
You’ll need to make the contribution within 90 days of settlement of your sale, and you need to complete the required forms to notify your fund that you’re making a downsizer contribution, no later than the time your contribution is made. You must have reached the eligibility age at the time of contributing.
What’s the benefit?
Aside from super being a concessionally taxed investment, there are a number of other ways a downsizer contribution could benefit you.
Funds in super accumulation phase are an exempt asset for social security purposes while you are under your Age Pension age. This could help increase or maintain your or your spouse’s entitlement to a pension or other benefit.
Also, making a downsizer contribution together with an after-tax contribution could help you contribute even more of your home sale proceeds into the concessionally taxed super environment.
Other eligibility rules and requirements apply. Before you contribute, to find out if a downsizer contribution is right for you, speak to your financial planner.
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