get the lowdown on downsizing

balance

So the kids have left home, you’ve got more room than you need… and the government’s kind of hoping you might be ready to sell.

 

You’ve probably heard by now: that people over the age of 65 can add up to $300,000 per person to their super account from the sale of their home.

Scaling back to unlock some extra cash can make sense (and halve your housework). But adding six figure sums to your super after age 65 needs a lot of thought.

 

Things to consider

Selling your home could reduce the amount of age pension you’re entitled to – maybe to zero.

That’s because your family home isn’t counted under the means-test for the pension – but everything else you own is.

There's a maximum amount of $1.7 million which you can transfer into an income stream (which gives you tax-free earnings). Anything above this amount must go in a super account (which is taxed at 15 per cent).

There are some other tax and Centrelink issues you’d also need to consider before you decide what to do.

There are also some other rules around when you need to make a downsizer contribution and selling your home.

You should consider speaking to a financial adviser to understand the impact of selling your home and making a downsizer contribution.

For more information on downsizer contributions, you can read more on the ATO website.

The federal government has proposed as part of its budget package announcements to reduce the eligibility age for the Downsizer Contribution, which would take effect from 1 July 2022.

 

 

we can help

Not sure which way to go? Our advice team can help you work through the benefits, and possible downsides, of the downsizing rules. It’s not a one size fits all solution, so a bit of advice now could really pay off tomorrow.

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