Downsizer Contribution

John asks: “My wife and I have lived in our home for 23 years, we are thinking about selling our home and moving into our investment property.   Will we be eligible to put some of that money into superannuation?”

Yes, it is likely that John and his wife will be eligible to put up to $300,000 each into superannuation.

Downsizer contributions are a way for eligible individuals to contribute a portion of the proceeds from the sale of their home into their superannuation fund, providing potential tax benefits and financial flexibility in retirement planning. It's essential to meet all eligibility criteria and follow the contribution rules to avoid penalties and ensure compliance with the law

Downsizer Contribution Rules Summary:

Eligibility Requirements:

• The home you are selling was owned by you or your spouse for at least 10 years before the sale.
• The home must be located in Australia and not be a caravan, houseboat, or other mobile home.
• The proceeds from the home sale should be exempt or partially exempt from capital gains tax (CGT) under the main residence exemption.
• You must make the downsizer contribution within 90 days of receiving the proceeds from the sale.
• You haven't previously made a downsizer contribution from the sale of another home.
• You need to provide your super fund with the Downsizer contribution into super form (NAT 75073) either before or at the time of making the contribution.

Contribution Limit:

Each spouse can contribute up to a maximum of $300,000, but the contribution amount can't exceed the total proceeds from the sale of your home.

Contribution Scenarios:

If the home is owned by one spouse, both spouses can still make downsizer contributions.

You don't necessarily have to be residing in the property immediately before it is sold. If a property is an investment property at the time of disposal but it was your main residence at some point during the ownership period, you may still be able to use the downsizer contribution strategy.

How to Make a Contribution:

Contact your super fund(s) to ensure they accept downsizer contributions.

Submit a Downsizer contribution into super form (NAT 75073) to your fund(s) before or when making the contribution.

If making multiple contributions, provide a separate form for each contribution.

Contributions must be made within 90 days of receiving the sale proceeds.

Requesting an Extension of Time:

You can request an extension of time, especially if circumstances beyond your control caused a delay.

Extensions should be requested within 90 days of receiving the proceeds.

You can seek a review or lodge an objection if you disagree with the extension decision.

This blog contains general and factual information and does not take into account anyone's individual objectives, financial situation, needs or tax circumstances. We strongly recommend you contact one of our Advisers if you would like personal advice.

Redpoint Investment Holdings Pty Ltd (trading as CY Financial Advice), is a corporate authorised representative (No. 378099) of CY Financial Services (AFSL No. 509648)