In’s and out’s of the super downsizer scheme

Posted on 27 May '19 by , under super.

Under the super downsizer scheme, eligible individuals that are 65 years and older may be able to make a contribution into their superannuation of up to $300,000 from the proceeds of selling their family home. This scheme came into effect on 1 July 2018 as one of several measures announced in the May 2017 Federal Budget.

Benefits to downsizer contributions:

  • It can provide a way to boost your super balance. For those who may not have saved enough to fund their retirement, tax-free downsizer contributions can be a good opportunity to top up their already existing savings.
  • No work test applies. This test requires that taxpayers aged 65-74 who wish to make voluntary contributions must be employed for at least 40 hours within a 30-day period. By removing this requirement, older Australians who no longer work significant hours will still be able to add large sums to their super.
  • There are no contribution caps, as concessional and non-concessional contribution caps do not apply.
  • Downsizer contributions aren’t subject to the $1.6 million total super balance restriction.
  • For couples, both spouses are able to take advantage of downsizer contribution. This means that up to $600,000 per couple may be contributed towards their super.

Other considerations to be aware of include:

  • Contributions must be made within 90 days of receiving the proceeds of a sale.
  • The sold property must have been owned for at least 10 years and must have been your main place of residence at some point in time.
  • The property must be in Australia and excludes houseboats, caravans and mobile homes.
  • Downsizer contributions are not tax-deductible.