Good news.. from 1 July 2018, people over 65 years who have owned their family home for more than 10 years can contribute up to $300,000 each to their superannuation fund when they sell. This is known a downsizer contribution. Its application is proposed in the draft Law Companion Ruling LCR 2018/D4, to be finalised soon.
There are a few provisos that need to be observed, some of which are as follows:
- The family home must be in Australia;
- The downsizer contribution can only be used by a member once;
- You don’t need to ‘downsize’ actually there is no requirement to make a subsequent purchase at all;
- A downsizer contribution is neither a concessional or a non-concessional contribution and therefore is not counted toward the contribution caps.
- Any capital gain or loss from the disposal of the home must have qualified for the main residence CGT exemption in whole or in part.
- The contribution must be made with 90 days from settlement of the home;
- The 10 year ownership must occur at all times during the 10 years prior to the sale. The ownership can be partly by one individual and partly by his or her spouse, not necessarily together, but between both for the full 10 year period.
- If the home is owned by one spouse, the other can also make a downsizer contribution of $300,000 provided they are at least 65 years of age.
- The maximum amount that can be paid to the Fund is either $300,000 per spouse (if both at least 65 years) or the sale price of the home. For example, $600,000 cannot be paid to the Fund if the home sold for $500,000.