In this column LUISA CAPEZIO and CRAIG PHILLIPS, of Phillips Wealth Partners, look at the benefits of ‘downsizer’ contributions.

One of our favourite changes to the superannuation rules in 2018 was to allow a one-off  “downsizer” contribution to superannuation without some of the usual restrictions.

To be eligible for the “downsizer” contribution, a person needs to be:

• 

  60 years of age or over.

• The primary residence which you sell must be in Australia,
• have been owned by you or your spouse for at least 10 years, and the sale must be exempt or partially exempt from capital gains tax.
• The primary residence is not a caravan, houseboat or other mobile home.

Individuals can contribute up to $300,000 of the sale proceeds to superannuation (or $600,000 as a couple).

You must not have previously made a “downsizer” contribution to your super from the sale of another home or from the part sale of your home.

Before (or at the same time as) making your contribution you must provide your fund with the “downsizer contributions into super form” which can be accessed from the ATO.

A couple of points to note:

The contributions need to be made within 90 days of the settlement and contributions are not tax-deductible, so you can’t claim a deduction for your contribution in your income tax return.

Downsizer contributions are not subject to the 15% contributions tax when they enter your super account.

A final consideration is that if the strategy is to create a pension be sure you consider the minimum pension payments  which are aged based.

There are other alternatives to superannuation that may result in better age-pension outcomes and lower means-tested care fees relevant to fund a move into permanent residential age care.

To learn more, call us on 1300 10 22 33 or book a 15-minute call (at no cost) via our website phillipswp.com.au

Disclaimer: This column contains general advice, please do not rely on it. If you require specific advice on this topic please contact Phillips Wealth Partners or your professional adviser. Phillips Wealth Partners Pty Ltd ACN 624858420 is a corporate authorised representative of Insight Investment Services Pty Ltd AFSL 309996.