Updated February 2023
New rules starting 1 January 2023 have lowered the age by which you can access the downsizer contribution measures to age 55 (previously age 60).
If you are over 55 and considering selling your home, you may be eligible to contribute a portion of the sale proceeds to your superannuation fund, provided certain requirements are met.
Historically it has been quite difficult for older Australians to top up their superannuation balances due to legislation and restrictions. Restrictions such as being too old, having too much super, and having to meet a work test, has made it challenging for retirees to increase their super.
However, the downsizer contribution presents a welcome opportunity for older Australians to contribute up to $300,000 (or $600,000 for a couple) into a complying superannuation fund without being subject to the usual contribution restrictions.
The “downsizer contribution” is excluded from the definition of a concessional and non-concessional contribution and does not count towards either contribution cap. There is no upper age limit for the downsizer contribution and there is also no requirement to meet a work test.
What are the eligibility requirements for the Downsizer Contributions?
The key eligibility requirements for the downsizer contribution are as follows:
- the contributions must be made from the proceeds received from the sale of a property;
- you must be aged over 55 at the time the contribution is made;
- the contributions must be made within 90 days of settlement of the property;
- the property must have been owned by yourself or spouse for a continuous period of at least 10 years;
- the property must have been your main residence at some point during that period and qualified for the main residence CGT exemption in part or in full;
- the home you sell must be in Australia and cannot be a caravan, houseboat, or other mobile home;
- your superannuation fund must be notified of the contribution in the approved form immediately prior to or at the time the contribution is made;
- the maximum amount of the contributions is the lesser of either $300,000, or the proceeds from the sale of the property; and
- you have not previously made a downsizer contribution.
How we can assist you with all your SMSF needs
In addition to providing you with information on the super downsizer measures, Davidsons Specialist SMSF team can also assist you with:
- resolving any ATO regulatory and SIS compliance concerns your SMSF may encounter;
- assessing eligibility to commence a pension and/or access lump sum benefits from your SMSF;
- the tax implications of drawing pension and lump sum benefits from your SMSF;
- your SMSF succession strategy and working together with you (and your solicitor) to provide guidance on how your super assets may be distributed on death;
- the structuring options available for your next SMSF property purchase;
- what your SMSF trustee responsibilities entail (SMSFs are not for everyone);
- assessing your eligibility to make other types of contributions (concessional, non-concessional etc); and
- monitoring your annual contribution and pension limits.
It is important you obtain the right advice as you may not necessarily have to “downsize” or purchase another property to be eligible to make a downsizer contribution.
To find out more please contact Davidsons for specialist advice on your eligibility to access the superannuation downsizer measures. You can contact Simon Abbott on (03) 5244 6867 or by sending an email to firstname.lastname@example.org.
Please note the information in this article is general in nature and should not be considered advice. Davidsons is not licensed to provide any financial product advice nor make any recommendations in respect of any financial product. Therefore we cannot recommend that you make a contribution to your superannuation fund. If you require such advice, you will need to consult a financial adviser who is licensed to provide financial product advice before you make a decision on a financial product.
This article was updated by Manager of Self Managed Superannuation Funds Simon Abbott.