Since July 2018 thousands of people have taken advantage of the Government’s downsizer contribution scheme by selling their home and making contributions to their super.
This has allowed older Australians to have more money to fund their retirement.
Although this is good news for people who have benefited from this scheme, some people may have missed out because they didn’t fully understand the eligibility rules.
Currently, you need to be 65 or over at the time of making the downsizer contribution to your super. However, from 1 July 2022, the Government has proposed lowering this age to 60. So, if it’s appropriate for you, you can downsize and contribute to your super earlier.
Here’s a summary of the other rules around making downsizer contributions:
You will need to complete the downsizer contribution into super form. You must give this form to your super fund before or when you make the contribution.
Federal Budget proposals to start from 1 July 2022 that may help you to boost your super:
A couple without super can still reach a comfortable retirement with the help of downsizer super contributions
Let us pretend it is now 1 July 2022 and the Federal Budget proposals are law. A couple with nothing in super and between the ages of 60 and 74 sell their home for $2 million. The couple may get up to $1,260,000 into super (combined) by taking advantage of the relaxation of the contribution rules.
Each member of a couple can make a downsizer contribution of up to $300,000 each (total combined $600,000). Then they may each take advantage of the bring-forward rule and contribute up to $330,000 into super ($660,000 combined). This adds to a total combined amount of $1,260,000.
The Association of Superannuation Funds of Australia (ASFA) estimates a couple needs $640,000 for a comfortable retirement. This example places this couple in a good position for their retirement.
It’s worth remembering that making a downsizer contribution means that if you’re under 65 and have not yet retired from the workforce (or don’t meet another condition of release) your money will be preserved. This means you can’t access your super, including your downsizer contribution, until you are retired or meet another condition of release.
Also, if you have reached pension age and your family home is currently exempt from the Centrelink assets and income test, selling it and contributing the proceeds into super could affect your age pension entitlements.