Many of you will know that from July 1, 2017, it became much harder to accumulate assets in superannuation due to a tightening of the limits on contributions.  The maximum “concessional contributions” (employer and salary sacrifice contributions) reduced to $25,000 pa.  and the “non-concessional contribution” (contributions made from after-tax money) cap reduced from $180,000 pa to $100,000 pa.

However, the downsizer contribution is not a non-concessional contribution and will not count towards the contribution’s caps. Further, the downsizer contribution can still be made if an individual has a total super balance greater than $1.6 million and there is no requirement for you to purchase another home.

You will be eligible to make a downsizer contribution to super if you can satisfy 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 homes;
• 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;
• 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 the sale, which is usually the date of settlement; and
• you have not previously made a downsizer contribution to your super from the sale of another home.

Importantly, if the home is owned by both names, $300,000 each can be contributed to super.

Given the substantial tax benefits provided by Superannuation the “downsizer contribution” can be a great opportunity to maximise the amount that you can have within this structure and assist with meeting your requirements in retirement. If you feel like you need further information about how the downsizer contribution could help you in retirement we’re here to help.