Are you over 65 and thinking of downsizing your home?
For retirees and pre-retirees, the government recently announced changes to superannuation allowing you to downsize your home and contribute part of the proceeds from the sale into your superannuation fund.
This strategy may be attractive for people who are in retirement or considering retirement, who are asset rich and income poor.
So, if you are 65 years old or older and have owned your home for 10 years or more, from 1 July 2018, you can contribute a lump sum of up to $300,000 per person to your superannuation fund.
If you are thinking about using this concession you should note;
1. that it does not apply before 1 July 2018
2. it may effect your $1.6 million transfer balance cap
3. it may effect your age pension entitlements
So it is important to get professional advice before implementing such a strategy.
Importantly, whilst you need to have owned the property for at least 10 years it only needs to be your principal place of residence for part of that 10 year period, not the entire time.
This 10 year period takes into account changes in ownership between two spouses over that 10 year period prior to the sale. For example, where one spouse owned the property, passed away, and the surviving spouse inherited the property, the surviving spouse can count the combined ownership period of both parties.
These circumstances equally apply where there has been a relationship breakdown and the home is transferred as a result of a marriage or de-facto settlement.
Note also, in the case of a couple the entitlement is $300,000 each or $600,000 combined.
This concession is only available once and the contribution to superannuation needs to be made within 90 days after your home changes ownership.
Should you require any further information or wish to discuss this strategy please feel free to contact Peter Quinn by submitting an online enquiry or calling us on +61 2 9580 9166 to book an obligation free appointment.
The information in this document does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness having regard to these factors before acting on it. It is important that your personal circumstances are taken into account before making any financial decision and it is recommended that you seek assistance from your financial adviser.