SMSF Strategy Guide: Online Library

Contribution strategies

SMSF Education
Smsf strategy guide: Online library

Downsizer contribution

BACKGROUND

The downsizer contribution is a new type of contribution that can be made from 1 July 2018. It is aimed at older Australians who release capital from downsizing their home, but may be over age 65 and not meet the work test. It enables them to get capital into super that they otherwise would not be able to.

THE LIMITS

The downsizer contribution is limited to $300,000 for an individual, however note that this can be $600,000 for a couple, as it is fine for each spouse to make contributions even if the house was only in one name.

ELIGIBILITY

The rules around downsizer contributions are as follows:

  • Contribution must be made after turning age 65
  • Must be made within 90 days of receipt of funds
  • Property must have been owned for at least 10 years
  • Only applies to sales after 1 July 2018
  • It is a once-only contribution
  • No need to actually buy another property
  • No work test is applied
  • Property sold needs to have been the primary residence of the individuals at some point in its ownership

NOT A NCC

One of the key concessions with these provisions is that the contribution is not treated as a non-concessional contribution, and as such it does not count towards the non-concessional contribution caps, and does not interfere with any other contribution rules.

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