What is a downsizer contribution?

Published: 15-May-2024

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Under downsizer contribution rules, you can transfer up to $300,000 ($600,000 for couples) from the sale of your main residence into super.

These are the key eligibility requirements:

  • Age: You must be at least 55 years old (as of 1 January 2024)
  • Ownership: The property must have been owned by you or your spouse for at least 10 years and must have been your primary residence such that it is exempt or partially exempt from capital gains tax
  • Sale proceeds: The contribution amount cannot exceed the sale proceeds of your home
  • Timing: You have 90 days from settlement to make the contribution to your super fund

There are several advantages to consider:

  • No contribution cap limits: This contribution sits outside the usual super contribution caps such as annual and total super balance limits
  • No age restriction: Unlike other types of contributions, those aged over 75 are still able to contribute
  • Tax advantages: Downsizer contributions are not taxed when they enter the tax super environment where earnings are taxed at concessional rates

The downsizer contribution scheme can be a valuable tool for Australians looking to unlock some of their home equity and boost retirement savings.

However it is important to note these contributions may affect your Age Pension entitlements.

You should consider seeking financial advice before implementing such a strategy to ensure it aligns with your overall financial goals.

ATO GOV.AU: https://www.ato.gov.au/

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