Superannuation Reform; Downsizing – What does it mean for you?
Downsizer superannuation contribution has arrived from 1 July 2018 which means that if you are 65 years or older you can choose to make a downsizer contribution into your superannuation of up to $300,000 each from the proceeds of selling the primary residence (your home) without having to satisfy the work test.
Your downsizer contribution is not a non-concessional contribution and will not count towards your contributions caps. The downsizer contribution can still be made even if you have a total super balance greater than $1.6 million. You can only make downsizing contributions for the sale of one home. You can’t access it again for the sale of a second home. Downsizer contributions are not tax deductible
This is an opportunity for clients who do not qualify for the Age Pension because it does not count towards the individual total super balance cap $1.6 million but it will still count towards the $1.6m transfer balance cap which means you will still not be able to make more than the maximum initial contribution of $1.6 million into the pension phase of superannuation.
The numbers are less attractive for clients who qualify for a part Age Pension because the primary residence is an exempt asset for Centrelink purposes whereas superannuation is counted under the Asset Test.
If you think you may be interested in making a Downsizer Superannuation Contribution or would like more information, please contact our office.