In an effort to get the top end of the housing market moving, and perhaps to reduce the number of those retirees, who (being asset rich but cash poor) are managing to receive some state aged pension, the government has introduced the Downsizers Super Contribution.
The new rules allow those over 65, to make a one off contribution of $300k when downsizing their home, which they must have held for 10 years as their principle primary residence (PPR). If a property is owned jointly then both can contribute $300k.
Sounds like a wonderful idea, getting a large slab of cash into the tax free pension environment.
However, there is one large reason that this may not be as popular as the government hopes. That is by downsizing, the pensioner converts an asset that is not counted towards the aged pension tests (ie their PPR) into something that is counted. Pension and super balances are counted once you are over age 65, therefore they may find their government payments reduced.
The rules apply to sales contracts entered into after 1 July 2018. The contributions do not count towards the normal caps, and unlike any other contributions for those over age 65, there is no need to satisfy the work test.
If you, or your parents, need further assistance in this matter please don’t hesitate to get in touch, as a careful analysis of whether utilising such downsizing opportunities would be beneficial is required.
Lindsay 0413 952 180