One of the biggest worries in retirement money, so it’s not surprising around 4,000 Australians have taken advantage of new rules to downsize their home and top up their super nest eggs, returning them up to $30,000 extra a year in retirement.
So how does it work?
You need to be over 65 and extra contributions are capped at up to $300,000 each (for a couple).
Is my home eligible?
If you have owned the home for more than 10 years, you are generally eligible, however, it must meet the test for a “main residence” exemption under capital gains tax rules.
What are the traps?
- You have 90 days after the sale of the property to make the extra contribution into your super fund.
- Downsizer contributions are not exempt from the Age Pension means test.
- Downsizer contributions can still be made even if you have a total super balance greater than $1.6 million, but they will count toward the transfer balance cap.
So, think smaller, downsize, seek professional advice and the rewards should come rolling in.
Discussion1 Comment
Whoa – Sorry, but this story is dangerous without proper advice.
For example, monies from downsizing and put into super will count as an asset.
Couple with $2.0m home and $300k in super and no other assets receive the full pension of $36,000 per annum.
Based on this story’s advice, they could sell their home and buy an apartment for $1.4m, putting the $660k ($300k each) into super.
Result
They lose all their age pension of $36,000 per annum, and the growth on an apartment is normally 2-4% less per annum than freestanding property.