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Do you want to supersize that?

09:15am September 03 2018

The “downsizer contribution” allows people over 65 to top up their super through property sales. (Emma Foster)

If you think all bets are off when it comes to topping up your super once you reach 65, then it’s time to think again.

Whilst there has always been the opportunity for some super top ups between 65 and 74 provided you undertook some paid work for a period of time, this didn’t suit everyone. It can be challenging just finding a job.

But with some changes that took effect from July 1, 2018, there is now one last chance to upsize your super in your golden years.  

Firstly, you’ll need to downsize your home. Don’t panic – it’s not how you’re probably imagining, into something smaller or cheaper. Rather, to take advantage of this opportunity that is generally being referred to as the “downsizer contribution”, it involves selling a property that meets certain requirements.  

Before the details, why do it in the first place?

Well, if you qualify as a “downsizer” you can make an additional contribution of up to $300,000 into super.  It’s an after tax contribution so no tax is paid on the way in, and because you have to be over 65, it comes out tax free. And if you are eligible to make other contributions to super, you can make them in addition to this one.

Also, you don’t have to meet a work test to make the downsizer contribution – you just have to be 65 or older – and it doesn’t matter how much you currently have in super. Just to make it better, if you and your spouse both qualify, then it can be $300,000 each – so $600,000 in total – even if only one of you owned the property.

As for the details, you have to sell a property that is located in Australia, have owned it for at least 10 years, and enter the contract for sale on or after July 1, 2018. Finally, the property needs to have been your principal place of residence at least some point during your ownership.  

Basically, you need to be eligible for some exemption from capital gains tax when you sell it. So it could have been your main residence in the past, but is now an investment property (or the other way around).

When you sell the property, the sale price is key. If you get more than $600,000, for example, then you could contribute up to $600,000 to super (being $300,000 maximum for each member of a couple, if both eligible). If you get less than $600,000, you can decide who gets how much into super up to the maximum allowed per person. But you can only contribute to the maximum of the sale price.

An important thing to remember is there is a time limit of 90 days from receiving the sale proceeds to getting the money into super. But don’t worry, you can still sell your main residence – even if you haven’t yet found a new house to buy – and make the contributions into super, because people aged 65 or older can withdraw money from super again at any time.

Given many Australians have their savings tied up in their home, this opportunity to upsize your super is a welcome – albeit still little known – relief. But like all things with super and finance in general, getting it right is important and some advice may help.



The information in this article is general information only, it does not constitute any recommendation or advice; it has been prepared without taking into account your personal objectives, financial situation or needs and you should consider its appropriateness with regard to these factors before acting on it. Any taxation position described is a general statement and should only be used as a guide. It does not constitute tax advice and is based on current tax laws and our interpretation. Your individual situation may differ and you should seek independent professional tax advice. You should also consider obtaining personalised advice from a professional financial adviser before making any financial decisions in relation to the matters discussed hereto.

Bryan is head of Financial Literacy & Advocacy at BT, leading a team of professionals committed to supporting the adviser community with technical, regulatory, policy and research support. He brings to the role many years’ experience, the last 16 spent with BT. With qualifications in Law, Commerce and Financial Planning, and being a SMSF Association Specialist Advisor, Bryan is a frequent industry presenter, facilitator and commentator.

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