New rules that allow couples to each put $300,000 from the sale of their primary residence into their superannuation fund tax-free has made downsizing a hot topic.
The idea that you and your partner can add a combined $600,000 to your retirement savings has made selling the family home a tempting prospect.
Is this the right time to downsize and cash in on the superannuation opportunity?
Ultimately, your decision should suit your circumstances, and it is important to seek professional financial advice.
What should you consider?
- The new Super incentive is designed to encourage the sale of more family homes, which are in short supply in many metro areas. That’s because many elderly couples would rather stay put than go to the trouble and expense of selling and buying again.
- To qualify for the superannuation incentive, you must have used the property as your primary residence for at least 10 years.
- Your downsizing proceeds can pay off the mortgage, provide funds for a new home and, of course, boost your Super.
- The rules don’t force you to buy a home, so you can lease if you want to move into a retirement village.
- Family homes can become a financial and physical burden as we get older. Utility bills become unnecessarily large, especially for heating and cooling. Maintenance tasks, such as cleaning gutters, become a bigger challenge than they used to be.
- Be aware that your age pension entitlements can be affected as they are subject to an income and assets test.
- However, since January 1, the asset test exemption has been extended for principal home sale proceeds to 24 months, giving you more time to find and perhaps renovate a new home.
- But you can’t delay making the Super contribution. It must be deposited within 90 days of selling your current home.
NOTE: The information in this article is general in nature and provided as a general overview only. Always consult your financial advisor or accountant for advice specific to your personal circumstances.