Downsizer Contributions
Posted on 05 May, 2020
by Capt. Mark Phillips
The Downsizer Contribution has been with us since 1 July 2018 and it is now worthwhile reviewing eligibility and the potential strategies that can be implemented with those rules.
Eligibility:
- Members making a contribution must be aged 65 or older;
- The home must have been owned by the member or their spouse for 10 years or more prior to the sale and be exempt or partially exempt from CGT;
- Each member can contribute up to $300,000 as long as the total contributions do not exceed the sale proceeds;
- There is no requirement for the members to purchase another residence;
- The contribution does not count towards the non-concessional cap so can be made even if the member has a Total Super Balance over $1.6 million.
Some strategies that can be implemented with the Downsizer Contribution:
- Provides a method to undertake a withdrawal/re-contribution strategy for people over age 65 that are otherwise ineligible to make further contributions;
- There is no need to sell an entire home, an ownership interest will qualify, and can be sold/transferred to a related party;
- Could sub-divide and build on existing home block, where the sale of the current home would be eligible for the downsizer contribution;
- Can be used as part of a strategy to increase the tax free percentage of existing pension benefits.
Further information can be accessed from the ATO’s website at:
https://www.ato.gov.au/Individuals/Super/Growing-your-super/Adding-to-your-super/Downsizing-contributions-into-superannuation/
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If you have any queries, please call the team on 03 9209 9777, email info@smsfengine.com.au or visit www.smsfengine.com.au.
