Downsizing Incentive BY SOPHIE DOYLE
Are you over 65*, have owned your own home in Australia for ten years or more and considering selling your home? If you answered “Yes”, you may be eligible for the Downsizing Incentive for Seniors. As part of its “housing affordability” theme in the 2017 Federal Budget, the Federal Government is incentivising older Australians to downsize their family home by allowing them to invest the proceeds into superannuation. What’s it all about? Individuals aged 65 and over can make a personal superannuation contribution of up to $300,000 using proceeds from the sale of a family home, which has
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been owned for at least 10 years. These new contributions can be over and above any other voluntary contributions the person is able to make under the existing contribution rules and concessional and non–concessional caps. The contribution must be made within 90 days of the disposal of the home (i.e., from settlement date). Currently, a person must be over age 65 at the time of making the contribution. From 1 July 2022, the age for eligible downsizer contributions will reduce to age 60. Eligible Home/Dwelling To make a downsizer contribution, an individual or their spouse must have ‘disposed’ of an ‘ownership interest’ in
a ‘dwelling’ they held just before the disposal which is located in Australia. In respect to this measure, the definition of the term ‘dwelling’ is modified to exclude caravans, houseboats and other mobile homes. The effect of this modification is that a ‘dwelling’ includes: A) a unit of accommodation that: (i) is a building or is contained in a building; and (ii) consists wholly or mainly of residential accommodation; and B) any land immediately under the unit of accommodation. Contribution Rules Voluntary contribution rules for people aged 67 and older can be restrictive. Currently, for those aged between 67 and 74 years, a 40–hour work test must be met.
