2017 Tax Planning Checklist: Downsizing and Superannuation

Downsizing and Superannuation

For older home sellers, from 1 July 2018, downsizing will be encouraged by allowing people aged 65 or older to make a non-concessional contribution of up to $300,000 to superannuation after selling their family home.  This amount is in addition to any other contributions they are eligible to make.  The contribution is exempt from the existing age test, work test and the $1.6 million balance test for making non-concessional contributions.

The sale must be of a principal residence that has been owned for the past 10 or more years, which will limit the effectiveness of this measure.  Where a couple jointly own the family home, they will each be able to contribute up to $300,000.

The budget proposal is not clear on whether downsizing in terms of area or value is a requirement.