Older people will be allowed to direct up to $300,000 from the sale of their primary home into super –three times the newly established cap on non-concessional contributions.
From 1st July, people aged 65 or over who downsize from a property that has been their main residence for a period of at least 10 years, will be able to make a non-concessional contribution of up to $300,000. These contributions will be in addition to those currently permitted under existing rules and caps, and will be exempt from the work test or the $1.6 million balance test.
Couples selling a jointly owned main residence can contribute up to $600,000 of the proceeds, between them.
The move is part of the Federal Government’s attempt to tackle Australia’s overheated property market by freeing up established homes and increasing supply.
Mercer Financial Advice Leader Richard Ebbs says the scheme is “an interesting development” but warns retirees to approach it with caution.
“They need to be careful about it because there could be Centrelink implications,” Ebbs says. “Your principal place of residence is not counted against the assets test but if you sell it and put it in super, that money is.”
“The main benefit of super is that it offers lower tax rates but if you’re on the Age Pension you’re not paying tax so there’s not necessarily much benefit. It might be simpler to invest the money personally.”
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