Did you know you could invest the proceeds of the sale of your family home to your superannuation, depending on your age and
From 1 July 2022, if you’re aged 60 years or older you may be eligible to make a downsizer contribution of up to $300,000 (or $600,000 for a
couple) to your superannuation fund from the proceeds of the sale of your home where specific requirements are met.
Downsizer contributions can be a great way of boosting your superannuation after retirement. As well as the extra capital they introduce, the contributions can also earn investment income that is either tax-free if you commence an income stream with the funds or be taxed at a concessional tax rate of up to 15% whilst in accumulation phase.
While downsizer contributions can be made regardless of what your TSB is, once the downsizer contribution is made to superannuation it forms part of your TSB. At this point, the downsizer contribution will increase your TSB which may impact your eligibility to:
Similarly, a downsizer contribution will also count towards your transfer balance cap (TBC), which applies when you move your
superannuation into retirement phase to commence an income stream.
So if you intend to use your sale proceeds to commence a superannuation income stream in retirement, it’s important to note that you have a personal TBC of up to $1.7 million on the total amount that can be transferred from a superannuation account into a taxfree superannuation income stream. You can find out your personal TBC by contacting the ATO or logging into myGov.
Lastly, your superannuation balance is assessed for your eligibility for the government age pension, whereas the value of your family home is an exempt asset. This means you may see a reduction or lose your entitlement to the age pension when you contribute some or all of the sale proceeds to your superannuation.
Although making a downsizer contribution may seem to be straightforward strategy, there are a number of eligibility requirements and nuances that you must be aware of when utilising these rules. If you’re thinking about downsizing and contributing to superannuation but want more information, talk to your Forsyths representative.