By The Australian Taxation Office
From 1 July 2018, the Australian Government will introduce the Contributing the proceeds of downsizing into superannuation (downsizing) measure. This measure is part of a package of reforms to reduce pressure on housing affordability in Australia.
This measure applies to the sale of your dwelling (your home), which was your main residence, where the exchange of contracts for the sale occurs on or after 1 July 2018.
If you are 65 years old or older and meet the eligibility requirements, you may be able to choose to make a downsizer contribution into your superannuation of up to $300,000 from the proceeds of selling your home.
Your downsizer contribution is not a non-concessional contribution and will not count towards your contributions caps. The downsizer contribution can still be made if an individual has a total super balance greater than 1.6 million.
Your downsizer contribution will not affect your total super balance until your total super balance is re-calculated to include all your contributions, including your downsizer contributions, on 30 June at the end of the financial year.
The downsizer contribution will also count towards your transfer balance cap, currently set at $1.6 million. This cap applies when you move your super savings into retirement phase.
You can only make downsizing contributions for the sale of one home. You can't access it again for the sale of a second home.
Downsizer contributions are not tax deductible and will be taken into account for determining eligibility for the age pension.
If you sell your home, are eligible and choose to make a downsizer contribution, there is no requirement for you to purchase another home.
Eligibility for the downsizer measure
You will be eligible to make a downsizer contribution to super if you can answer yes to all the following:
You are 65 years old or older at the time you make a downsizer contribution (there is no maximum age limit). The amount you are contributing is from the proceeds of selling your home where the contract of sale was exchanged on or after 1 July 2018.
Your home was owned by you or your spouse for 10 years or more prior to the sale. Your home is in Australia and is not a caravan, houseboat or other mobile home. The proceeds (capital gain or loss) from the sale of the home are either exempt or partially exempt from capital gains tax (CGT) under the main residence exemption, or would be entitled to such an exemption if the home was a CGT rather than a pre-CGT (acquired before 20 September 1985) asset.
You have provided your super fund with the downsizer contribution form either before or at the time of making your downsizer contribution. You make your downsizer contribution within 90 days of receiving the proceeds of sale, which is usually the date of settlement. You have not previously made a downsizer contribution to your super from the sale of another home.
Downsizer contribution amounts
If eligible, you can make a downsizer contribution up to a maximum of $300,000. The contribution amount can't be greater than the total proceeds of the sale of your home.
A couple sell their home for $800,000. Each spouse can make a contribution of up to $300,000.
End of example
A couple sell their home for $400,000. The maximum contribution both can make cannot exceed $400,000 in total. This means they can choose to contribute half ($200,000) each, or split it – for example, $300,000 for one and $100,000 for the other.
End of example