What you need to know about superannuation downsizer contributions

29 March 2023

A superannuation ‘downsizer contribution’ can be an excellent way to build a member’s superannuation balance. From 1 January 2023, those who are aged 55 and over may be able to make a ‘downsizer contribution’ to their superannuation fund from the proceeds of the sale of their family home. Prior to this date, the age limit was 60 years or older.

What is a superannuation downsizer contribution?

If an individual is aged 55 years or older, they may be able to contribute up to $300,000 from the proceeds of the sale of their main residence to their superannuation fund.

This also means that for couples:

Both individuals can access this concession for the same home
This concession applies to both individuals even if one of the individuals does not own any interest in the property
Each individual can contribute up to $300,000 each (up to $600,000 per couple), into their individual superannuation fund.

Eligibility

The eligibility criteria to gain access to this concession are;

You are aged 55 years or older at the time of making the contribution.
The home was owned by you or your spouse for at least 10 years prior to the sale.
The home is located in Australia and is not a caravan, houseboat or mobile home.
The net capital gain from the sale of the home is either exempt or partially exempt from capital gains tax, on the basis that the home has been designated as their main residence.
You provide your super fund with the “Downsizer contribution into super form (NAT 75073)” either before or at the time of making the downsizer contribution.
The downsizer contribution is made within 90 days of receiving the proceeds of the sale.

A superannuation downsizer contribution can only be made from the proceeds of the disposal of one main residence.

Conclusion

Downsizer contributions can be especially beneficial if individuals have retired and wish to downsize the family home and use the equity in their home to help fund their retirement. They are also not obligated to purchase another house with the proceeds of the sale, to take advantage of this concession.

Source: Link Advisors