The Home Downsizer Contribution: Boost Your Retirement Savings

[@DarrellHewton]

Thanks for your excellent content 👏👏 Where a house has been held for >10 years, initial period investment and now owner occupied as principal, does this affect eligibility?

[@SuperGuyAu]

You're welcome. As long as the proceeds are exempt or partially exempt from CGT under the main residence exemption. Read more here www.ato.gov.au/individuals-and-families/super-for-individuals-and-families/super/growing-and-keeping-track-of-your-super/how-to-save-more-in-your-super/downsizer-super-contributions

[@qldgooner]

great info as just about to downsize and I'm 63. I didn't know I could do this 👍

[@SuperGuyAu]

Glad to help!

[@NikStar1986]

Can you do a downsizer PLUS carry forward of non confessional? Essentially put 630,000 into super (bringing forward 110,000 x 3)

[@mce_AU]

Thanks. I'm 59 and look like I can use this.Cheers.

[@SuperGuyAu]

No problem

[@michaelfrew5652]

Could you please do a video on how the Maximum cap of $1.7m and $1.9m happens and will it increase again and when would it?

[@SuperGuyAu]

Will do!

[@petercoburn2362]

My wife and I qualified for a downsizer contribution but found the paperwork very daunting. Both our superannuation accounts are in income phase and my transfer balance is near the maximum cap so I couldn’t apply. We did manage to add to my wife’s account though.

[@Namlange70]

Thanks Chris for the information. Sadly I can't use my investment property as my downsizer contribution.

[@silversun119]

Do you have a video that covers contributing the proceeds of the sale of an investment property into Super?

[@SuperGuyAu]

Not yet, but great idea!

[@radic888]

​@@SuperGuyAu Yes, do that, please.

[@muzza32b]

Hi Chris what do you mean by the contract of sale entered into was after 2018! So if I purchased the house before this I can’t contribute to the downsizer contribution?

[@SuperGuyAu]

Contract of sale for when you sold your home. I know it seems obvious that that would be the case... but the rule was brought out a while ago and that was one of the conditions!

[@JoelKennedy-e6e]

Great content. I'd like to understand how someone who has already started a pension account could benefit from the downsizer scheme. My understanding is you can only contribute to an accumulation account. I'd like to understand the rules around having an accumulation account and pensions account at the same time and conversions between. Other than meeting a condition of release, are there any restrictions or important considerations of moving money between?

[@SuperGuyAu]

A downsizer allows you to get more wealth into the concessionally taxed superannuation environment. The contribution would need to be made into an accumulation account and could either 1. stay in an accumulation account 2. be used to start a second pension or 3. combined with the existing pension by refreshing the existing pension..... I would suggest seeking advice before doing this.

[@kevinangelathomson8336]

I bought PPOR in a regional town for work and intend to move back to a capital city in the next 4 or 5 years. The property that I move to in the capital city is an investment property. In say 5 years time when we move could I rent out the regional property for 6 years and then sell it CGT free and contribute to super? Then at that point convert the investment property to PPOR. There will always be CGT on this property it but I don’t ever intend to sell it, it will be our home. My wife and I will meet the age requirements. I will speak to my accountant but wondering if I am on the right track with my thinking.

[@MrBerry67]

Very helpful Chris - can I ask if I am using all of my non concessional allowance to move a UK pension into my Super account - can I still make a downsizer contribution?

[@SuperGuyAu]

Glad it helped! Downsizer contributions do not count towards the non-concessional contribution cap.

[@MrBerry67]

@@SuperGuyAu many thanks for your reply - it is appreciated

[@ellisplata680]

great info. BUT I'm just wondering what happens if your wife is 10yrs younger and you sell your home at 60yrs and your wife is only 50yrs old?

[@SuperGuyAu]

Great question! You need to be 55 years or older to make a downsizer contribution. Therefore, only you would be eligible to make the downsizer contribution, not your wife. Keep in mind, though, that standard non-concessional contribution caps may be available to her.

[@philgoogle1535]

If you've owned your PPOR for more than 12 months and then sell it, you don't pay CGT anyway. It looks like to me that the main advantage as far as super contributions are concerned is that they are tax free going in. Can you clarify please Chris if this advantage exists for both accumulation and pension phases?

[@jonahtwhale1779]

Tax free income if the money is invested in super.

[@KenKilpatrick-rf5mx]

Hi Chris, my partner and I have just subdivided our land which had been our family home, is there any way we can avoid CGT as we have owned and lived on this property for over 30 years, I'm told this will attract CGT, which seems incredible unfair, appreciate your advice. Cheers.

[@SuperGuyAu]

I recommend you seek advice from your Accountant in relation to any specific tax matters.

[@jonahtwhale1779]

Split the home intoo 2 properties A & B. Person 1 declares property A as their primary residence and can sell it CGT free. Person 2 declares property B to be their primary residence etc. Seek legal advice.

[@scottnordine3984]

If we downsize and buy a cheaper home, is the new home then counted as an asset when calculating for the pension?

[@SuperGuyAu]

Generally a principal place of residence is not assessed for Age Pension purposes. Read more here www.servicesaustralia.gov.au/real-estate-assets

[@ozguy3667]

Thanks for the video

[@SuperGuyAu]

You're welcome

[@JimboJones-qn4wd]

By doing this, won't it likely reduce any government pension you are entitled to? If so, then isn't in the government's interest for people to do this?

[@SuperGuyAu]

Yes. Maybe that's part of the reason why it was brought in - as an incentive so as to reduce pressure on the housing market and social security funding.

[@shadowminister4090]

I'm not qualified to give advice. When ScoMo introduced Downsizer, I thought he was just asking people to shift part of a tax-free asset (their owner-occupied home) into an asset that would be included in Centrelink's Asset Test and thought he was conning us. I concluded it'd be better to sell the big house and move to a smaller property, in a nicer and more expensive area and therefore retain the CGT/Assets Test free status, and maximise my Aged Pension entitlements. I have changed my view! Superannuation Pensions are tax-free anyway, and I'd rather have a higher level of tax-free disposable income than being limited by Centrelink eligibility conditions for the Aged Pension or later in life need to access the equity in my home via a Reverse Mortgage. I'm happy to maximise my Super entitlements, and that will include things like Concessional and Non-Concessional Contributions and the Downsizer. Some of these issues are complex, so if in doubt, definitely speak to someone qualified to give you full advice. Cheers.

[@HGills]

I don't understand the logic of having to have owned the house for 10 years of more. We are in our late 50's early 60's and moved into a new home 6 years ago along with our adult aged children who have now moved out. We can't do the downsizer contribution for another 4 years but hope to retire next year. We'd need to keep the house after retiring and either live in it or rent it for another 3 years (but where would we live if we did that) to benefit from this. I don't see the point of the 10 year rule ?

[@SuperGuyAu]

Good point. I'm not sure of the logic behind it either. Maybe to reduce the number of people utilising the strategy???

[@anthonyhayson7308]

Hi, Love the information. When you say owned does that mean mortgage free for 10 years or just owner occupier but may have had a mortgage within 10 years. Thanks Anthony

[@PhilInAustralia]

Am I right in assuming the "partially exempt from CGT" statement means a downsizer contribution could be made from the sale of an investment property that was previously a PPOR (owned for 30 years, first 15 as PPOR, second 15 as IP)?

[@SuperGuyAu]

Correct, but in these instances it would be best to seek financial advice or talk to your accountant prior to implementing the downsizer rules.

[@christophers7070]

Chris, do you mean that the downsizer contribution is treated the same as a non-concessional contribution? As throwing $300,000 into super and loosing $45,000 in tax straight away, would not be very palatable. Can you clarify? thanks Chris.

[@SuperGuyAu]

There is no tax on non-concessional contributions… only on concessional contributions.

[@cheshunt5597]

But at the rate Melbourne & Sydney real estate is growing, selling the home is throwing away $.

[@DoDar]

Maybe Roy and Leni moved into a retirement home. I wouldn't want to have to look after my large family home in my 70s. Plus the $600,000 returns are now tax free if they have an allocated pension fund. Yes, house prices go up but so does rates, electricity and insurance etc... Good move Roy and Leni 😊

[@SuperGuyAu]

There's no right or wrong - just different options based on what suits your situation. Everyone has different values, needs and objectives.

[@CraigBarron-qx9bq]

Age 55 or 65?

[@SuperGuyAu]

55. It used to be 65.

[@chrisj6321]

Doesnt this only benefit really rich folks. Most people can pay 300k in anyway using bring forward rules on your non concessional contributions

[@SuperGuyAu]

You're right, the standard non-concessional caps allow up to $330k to be contributed in any one year. However, it's not uncommon for people to sell an investment property as well or have more than $300,000 in downsize proceeds where both caps are utilised.

[@ozguy3667]

Has anyone heard of the name “Leni “ before. A new one for me

[@mce_AU]

You need to get out more. :-)

[@SuperGuyAu]

Haha. It exists! I promise.

[@silversun119]

I know two!

[@samghising2170]

Leni Kravitz- American woman!