The Government has recently announced superannuation measures to address the housing affordability crisis.
The cornerstone of this scheme is that it will allow people aged 65 and over to make additional non-concessional (post-tax) contributions of up to $300,000 from the proceeds of selling their home.
Key details of this scheme include:
- will only apply to a principal place of residence held for a minimum of 10 years
- each partner of a couple will be able to access the arrangement, potentially allowing for superannuation contributions of up to $600,000 per couple
- even if the home is only in the name of one spouse, each partner can make a downsizer contribution
- contributions will not count towards the concessional or non-concessional contribution caps and the individual making the contribution will not need to meet the existing maximum age, work or $1.6m balance tests for contributing to super
- the Age Pension tests will still apply to the proceeds from downsizing a home in this manner
- you are not required to make any subsequent purchase of another dwelling after selling your home
- the measures will apply to the sale of a home where the contract of sale is entered into on or after 1 July 2018
- you will have a 90 day window from the date of settlement in which to make the contribution into your superannuation fund.
These measures are designed to make it easier for people to downsize from their family homes and to make more effective use of existing housing stock, by increasing the number of larger houses available for purchase. Further, they also provide another worthwhile tax planning opportunity as you head into retirement.