Should you be a “Downsizer”?

One of the key takeaways from last week’s budget was the reduction in the eligibilty age for downsizer measure contributions.

From 1 July 2022 it is proposed that anyone 60 years of age and older will be eligible to make a downsizer contribution. The downsizer contribution allows people to make a one-off after-tax contribution to super of up to $300,000 from the proceeds of selling their home they have
held for at least 10 years.

Under the rules both members of a couple can make downsizer contributions in respect of the same home, and the contributions do not count towards a member’s nonconcessional contribution caps.

So what does this mean for you?

If you’re an eligible couple in your early sixties, you can potentially sell your home to contribute up to $1.26m to super in a year via a combination of $300,000 downsizer contribution and $330,000 non-concessional contribution each.

However, if you’re a person in your early sixties wanting to contribute a much smaller amount, it might be a good idea to see an adviser to get advice on what type of contributions you should make.

For example, if you have $300,000 from the sale of your home that you wanted to contribute to super, you might be better off making a $300,000 after-tax contribution under the bring-forward rules in order to preserve your ability to make a downsizer contribution in the future.

If this sounds like a strategy that you or one of your family or friends should be considering, please contact one of the team on 086222 7909 or support@inspiredmoney.com.au to speak to one of team or reach out to your finance professional.

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