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2017/2018 Update: New Housing Measures - clarification on 'Downsizer Contributions'

Further to our recent post on the new housing measures coming into effect from 1 July 2018, further clarification has now been provided on what 'downsizer contributions' are.

As you know, the new housing measures permit individuals aged 65 or over to use the proceeds from the sale of an eligible dwelling that was their main residence to make superannuation contributions without having to satisfy the age or gainful employment tests that usually apply. These contributions are referred to as 'downsizer contributions' and are limited to a maximum of $300,000 per person (or $600,000 per couple).

By implementing this new housing measure, the Federal Government aims to provide an incentive for older Australians to downsize their home which, in turn, will hopefully reduce pressure on overall housing affordability by making larger homes more available for growing families.

There has been some initial confusion about whether individuals or couples have to actually 'downsize' to a smaller property in order to take advantage of this new housing measures. Clarification has now been provided that there is no need to actually 'downsize' to a smaller property, or to even acquire a new property at all. All that is required is that the individual (or their spouse) sells their main residence. The individual can then move into any living situation that suits them, including aged care, a retirement village, a bigger or smaller dwelling than the one sold, a rental property, or even with family.

Further, the property sold does not need to have been the main residence of the individual (or their spouse) for the entire duration of the ownership. It simply has to have been owned for:

  • at least 10 years; and

  • have been their main residence at some time during the ownership period.

This opens the door to the sale of an investment property (that was at one stage a main residence) to make a downsizer contribution.


Want to know how these changes may benefit your financial plan? Get in touch with us and we will work it through with you.

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