New law increases super contribution limit for downsizers
15 Jun 2018
June 2018
New law increases super contribution limit for downsizers
Planning to sell your home and downsize? If eligible you can contribute up to $300,000 to super from the proceeds.
Over-65s are being given the chance to boost super contributions, giving them more financial security and more control over their retirement.
New downsizer superannuation contributions legislation will increase the maximum amount they can contribute to super using money gained from selling their home.
From 1 July 2018, all eligible home-sellers will be able to contribute up to $300,000 to their super savings, tax-free and with no work test or total superannuation balance limit.
Previously, they could generally voluntarily contribute a maximum of $100,000 per year, and only if they could prove they were gainfully employed for at least 40 hours in a consecutive 30-day period and their total superannuation balance was less than $1.6 million. Generally now, everyone gets a chance, even the fully retired, as long as they meet the criteria.
The new contributions are ‘non-concessional’, which means they are not tax deductible. Instead, they are part of the tax-free component of superannuation interest. And the amount is per person, so if a couple sells their home to downsize and nets $600,000 they can each contribute the maximum $300,000 to their individual funds.
Meeting the criteria
To be eligible, those aged 65 or over must have owned their home continuously for at least 10 years before selling it. Also, it must have been their principal residence for at least part of the ownership period. However, they don’t need to have lived in it for the whole time.
There are rules around making the contribution, including transferring within 90 days of disposing of the home. Also, downsizers can only take advantage of this generous provision once, from the proceeds of one home sale.
Get in touch and see if you qualify
It’s important to be 100 per cent clear on the full facts and eligibility criteria. A qualified financial adviser can give you more information and help you navigate the rules and implications of the new downsizer superannuation contribution provision.
Did you know?
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