Downsizing contributions into superannuation (update)

Date of article: 5 December 2022
Last updated: 5 December 2022

Individuals may make a once-off, post-tax superannuation contribution of up to $300,000 per person from the proceeds of selling their home. This contribution is an exception to the non-concessional contributions caps, and does not count towards the non-concessional contributions caps.

Update:

The eligible age is as follows:

   From 1 January 2023, 55 years old or older
   From 1 July 2022, 60 years old or older
   From 1 July 2018, 65 years old or older
   There is no maximum age limit.

The reduction of the eligible age provides more flexibility for individuals in the age group who are (or who are planning of) selling their home.

Eligibility criteria:

• You have reached the eligible age at the time you make a downsizer contribution.
• The home (excluding a caravan, a houseboat, or other mobile home) was owned by you or your spouse at all times during the 10 years ending just before the disposal.
• The capital gains or loss from the disposal is either exempt or partially exempt from capital gains tax (CGT) under the main residence exemption, or if the home was acquired pre-CGT would be entitled to such an exemption if the home was a CGT rather than a pre-CGT asset.
• You complete and provide your SMSF with the Downsizer contribution into superannuation form either before or at the time of making the contribution.
• The contribution is made within 90 days after the change of ownership occurs as a result of the disposal.
• You have not previously made a downsizer contribution.

Contracts of sale entered into before 1 July 2018 are not eligible.

Section 292-102 ITAA1997.

Downsizer contribution limit

The maximum you can contribute is the lower of $300,000 or the sale price of your home.

Note that the combined value of your contribution and your spouse’s contribution cannot exceed your home sale price.

The 10-year rule

Whilst you or your spouse must have owned the property at all times during the 10 years ending just before the disposal, you do not have to have lived in the home for all of the last 10 years, but it must meet the test for a ‘main residence’ exemption under CGT rules.

Do I have to 'Downsize'?

There is no requirement to make any subsequent home purchase.

Contributions caps

Whilst downsizer contributions are exempt from the non-concessional contributions cap, it still is subject to the Transfer balance cap (which means that if you have exhausted your Transfer balance cap amount, the contributions may not be used to commence retirement phase pension).

Do you need help with your situation or if you wish to discuss the above, please contact us. Our contact details.

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