Rules for Over 65s Superannuation contributions after selling your home
From 1 July 2018, individuals aged 65 years and over are able to make personal contributions into your super of up to a ‘cap’ of $300,000 using the proceeds from the sale of your home.
The is referred to as a superannuation downsizer contribution.
In order to qualify, the property must have been your principal place of residence. And, you must have owned the property for a minimum of 10 years, but you are not obliged to have lived in the property for the full 10 years.
For those who meet the ownership criteria, the existing super contribution rules for people aged 65 years and older do not apply. Therefore, there will be no need to satisfy a work test for those aged over 65, and those over the age of 75 are eligible to contribute. Similarly, restrictions on non-concessional contributions for people with balances above $1.6M do not apply.
While the eligibility rules for contributing to super in these scenarios have been relaxed, the $1.6M cap on how much can be transferred into retirement income streams continues to apply.
Both members of a couple are typically able to take advantage of the downsizer contribution ‘cap’, meaning that a couple could contribute up to $600,000 ($300,000 each) to super provided they are both over the age of 65.
Downsizer contributions must be made to a super fund within 90 days of settlement of the property. Extensions to this deadline may be sought from the Tax Office. The downsizer contribution is similar to a non-concessional contribution, so there are no tax deductions.
Read our related article on Over-65s dodge Downsizing Rules contributions using investment property
This article was first published in the Weekend Australia by Andrew Heaven of WealthPartners Financial Solutions on 30 November 2019.
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