The downsizer superannuation contribution allows qualified older Australians to sell their property and use the proceeds to make a superannuation contribution. This way, they have more money as savings when they retire. Moreover, the contributions made to this scheme are tax-free, making it a perfect investment for senior citizens. Notably, the government allows savings of up to 300,000 dollars for citizens aged 65 and above.
Related read: Tips for Increasing Your Superannuation
Unfortunately, not every Australian qualifies to contribute to this scheme. Those who qualify must have the following characteristics:
- Must be 65 years old or more.
- The home being sold must have been the contributor’s (or their spouse’s) primary residence at some point in the past, and they must have owned it for at least 10 years.
- Caravans, mobile houses, and houseboats are not permitted for the scheme. Additionally, the said house must be in Australia.
- Within 90 days of receiving the sale profits, a downsizer contribution must be provided.
- Before or at the time of the contribution, the contributor must give their super fund a downsizer contribution form.
- Contributors shouldn’t have made a downsizer contribution to super before.
- Even if the contributor bought the property before September 20, 1985 (when CGT was discontinued), it must have been their primary residence at some point throughout their ownership.
Contribution will not count towards superannuation caps
Downsizer contributions do not count towards your superannuation contribution caps, whether they are concessional or non-concessional. Regardless of your total super balance, you can still make a downsizer contribution. Your downsizer contribution amount will, however, be included in your overall super balance when it is recalculated at the end of the financial year.
Work test isn’t required
This contribution does not require a work test or a work test exemption, making it perfect for persons between the ages of 67 and 74. It’s even more enticing if you’re 75 or older because you won’t be able to make voluntary donations until you participate in this programme.
Reduces Tax Liability
Because the downsizer contribution is made after taxes, no tax is paid on the way in. It is also tax-free when people withdraw money in the future because they are over 65.
There are No obligations to Purchase a New Home.
Contributors are not obligated to buy a new house with money they might make on the property sale. This is if they sell their primary residence and make a downsizer contribution to their super.
Contact Precept Financial Services to Help You with Downsizer Super Contribution.
Financial security is important, especially in old age. This is because after retiring, seniors do not have many sources of income. That said, it is very wise to have a financial advisor like us to walk with you. Call us today and let’s get you started on a downsizer super contribution