Contribute more to super, by downsizing your home
On 9 May 2017 the Federal Government announced that from July 1 2018, individuals aged 65 or over will be able to make a contribution to super of up to $300,000 from the proceeds of selling their home.
The measures are said to be designed to encourage older Australians to downsize from homes that no longer meet their needs and free up housing supply for young families, while also providing soon to be retirees an avenue to top up there super in a tax effective manner.
“At the moment, recent provisions mean we can only get about 1.6million dollars into super per person, so for a lot of people that’s a lot of money, but for some people it’s not enough money. This new provision will allow people to circumvent that, but it will also allow people who are moving towards retirement, or retiring – to make additional contributions at no cost to their superfund.”
The ‘downsizing’ contributions are not tax deductible, and can be made regardless of caps and restrictions that otherwise apply when making super contributions – however there are a eligibility criteria which must be met.
“To be eligible a person must be over 65, must have owned their property for at least 10 years and the property must be eligible for at least a partial CGT main residence exemption. These are the three main criteria for accessing these contributions.” Mr Morse said.
There are also no restrictions on the sale of properties, and there is no requirement to purchase another property.
Despite the misgivings of some politicians of particular persuasions, Mr Morse believes the changes a positive change for the superannuation system.
“Over the past few years we have continued to see restrictive super legislation introduced, and in my opinion this is the first real positive forward step to making super more accessible and less restrictive. I think this is very positive and adds value back into the system.”
“It encourages people to do what the super system was set up for – which is to encourage self funded retirement with no reliance on the age pensions. If we can get more people financially independent in their retirement, then that would be beneficial to both older Australians and younger people looking to enter the property market, not to mention reducing the pressure on the welfare system.”
The ATO has released a detailed summary of the legislation, the supporting criteria which must be met, and the benefits which can be derived through using the scheme.
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