Updated laws designed to help owners downsize from their family homes are now in place, which may make it easier and more affordable to plan your retirement.
From a mortgage broker’s perspective, the scheme appears worthy of consideration because it’s designed to bolster your savings by minimising tax. You may want to talk to your accountant or financial adviser to delve into the nitty-gritty.
The downsizer-friendly changes have been made in the Treasury Laws Amendment (Enhancing Superannuation Outcomes For Australians and Helping Australian Businesses Invest) Bill 2021.
Despite the dry title, the new rules have some big benefits. It means that the age that you can deposit the proceeds of a property sale into your superannuation has been reduced from 65 to 60 years of age.
Each owner of the sold property over 60 can now deposit $300,000 of the proceeds directly into their superannuation and the reduction in the age limit is designed to encourage more owners to sell large family homes.
Almost 40,000 Australians have contributed $8.9 billion to their super funds under this measure so far (when the age limit was 65). Here are the key elements of the downsizer contribution initiative:
- You must have owned the home for more than 10 years.
- Couples can each place $300,000 into their respective super funds so long as each individual is aged 60 or more.
- It doesn’t matter how much you have in your super fund already.
- There are no test requirements, which means you can still be working. You also have no obligation to buy a new, smaller home as part of the initiative.
- Your money is deposited and returned tax-free when withdrawn from your super.
- You can use the proceeds of a previous family home (a one-time principal residence) that is now rented. So, you may not have to move at all.
If you’re thinking of downsizing and need assistance with refinancing, please don’t hesitate to talk with me. Interest rates are at record lows and while they’re predicted to rise later this year, we can always look at fixed rate and split-loan options.