If you’re over 55 and looking to boost your retirement savings, you may be eligible to make a super contribution of up to $300,000 from the sale proceeds of your primary residence.
On 1 January 2023, the age when eligible Australians qualify to make downsizer contributions was reduced from 60 to 55. For those who qualify, it can be an opportunity to top up your super balance to capture potential tax-exempt future investment returns when you turn 60 and may be eligible to commence a retirement phase income stream.
So, if you’re considering selling your home and using downsizer contributions, here’s what you’ll need to know.
Benefits of making a downsizer contribution
Rules and other considerations to be aware of
It’s important to note that while downsizer contributions are exempt from regular contribution caps, the funds will contribute towards your total super balance amount. They are also subject to the transfer balance cap (TBC).
The TBC applies when funds are moved from your super account into a retirement pension, where income generated from investments has a 0% tax rate. This amount is currently capped at $1.7 million (but is increasing on 1 July 2023 – more on this below), and any amount above, including from the downsizer contribution, will still be taxed at the accumulation rate of 15%.
Additional considerations include:
Where to go for more information
Depending on your personal circumstances, various other rules may apply, so it’s important to speak with an adviser before making any significant decisions.
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