The new Downsizer Contribution

Since the start of the new financial year, 1 July 2018, superannuation contribution opportunities for those aged 65 plus have expanded.  They now include the new Downsizer Contributions.  Have you heard about it? Checked out the rules?

How do I qualify?

These contributions let eligible individuals to contribute up to $300,000 from the sale of their property into super within 90 days.  And you don’t need to satisfy the work test.  Bonus!

This extra payment can be made in addition to the concessional contribution and non-concessional contribution caps.  It is not restricted by your total superannuation balance.

An “eligible property” must have been owned by an individual, their spouse or former spouse for 10 continuous years just before sale. Also, the individual must satisfy all the requirements to qualify for a full or part capital gains tax (CGT) exemption.

Check the ATO Rules to see if you tick all the boxes here.

Top Downsizer Contribution Tip!!

Downsizer contributions can present an opportunity to implement a recontribution strategy.  What’s this, you ask??  This strategy enables you to increase the tax-free component of your superannuation.  This helps reduce tax liability on death benefits that will paid to non-dependent beneficiaries, such as adult children.

Any Downsizer Traps?

TRAP!!  Pensioners should know, that selling the family home then making a Downsizer Contribution may reduce Age Pension entitlements.  This is because the principal home is an exempt asset for Centrelink purposes.   Whereas, superannuation is counted as an asset for clients who are of age pension age.

If this sounds like something you’d like to know more about, give your adviser a call, or we’d be happy to walk you through whether or not it’s right for you.