New ‘downsizer contributions’ legislation means that from 1 July 2018 individuals can use the proceeds from the sale of a current or former principal place of residence as an additional superannuation contribution.
The downsizer contribution legislation is welcome, but there are however some important requirements that must be met for the new rules to apply.
- The amount of the contribution is capped at $300,000 per individual, meaning a married couple could contribute up to $600,000.
- The contribution can be made even if a person’s super balance exceeds $1.6 million.
- The sale of a current or former principal place of residence must occur on or after 1 July 2018, and the residence must have been owned for at least 10 years before the sale.
- The residence cannot be a mobile home, caravan or houseboat and it must be located in Australia. As well, any contribution made must be done within 90 days of settlement.
- The individual must be over the age of 65. If making a contribution for your spouse, the contribution must be made after your spouse turns 65.
- All downsizer contributions for one individual must be made from the same property, however, your spouse may make a downsizer contribution from one property and the partner may make a downsizer contribution from another property.
- Any unused portion of a downsizer contribution cap cannot be transferred to your spouse.
- For those over the age of 75, the contribution can still be made even if you do not satisfy the ‘work test’.