Super schemes: For saving up or scaling down

May 8, 2018

Two super housing schemes – one designed to help those looking to buy their first home, the other to help those scaling down to a smaller one, take effect from 1 July, 2018.

Both schemes, announced in last year’s Federal Budget, involve using your superannuation.

First Home Super Saver Scheme

First home buyers can now use their super to save up to $30,000 for a house deposit.

From 1 July, customers can withdraw money saved under the first home buyers’ scheme, announced in last year’s Federal Budget.

Under the scheme first home buyers can direct up to $30,000 above their compulsory employer contributions, into their super account, for a house deposit.

These extra contributions are capped at $15,000 in a single year and cannot include compulsory employer contributions. They also count towards your $25,000 pa concessional cap.

The beauty of it is that the extra contributions get the same tax benefits of super, with contributions and earnings taxed at 15%, rather than marginal rates. Any withdrawals will be taxed at 30% below your income tax rate and must be used specifically for a house deposit.

Couples, siblings or friends can each access their own eligible contributions to combine them to purchase the same property.

For full details of the scheme, go to the ATO website.

Downsizing contributions into superannuation

People aged 65 and older who sell their primary home on or after 1 July, 2018 can make a tax exempt one-off contribution of up to $300,000 to their superannuation, from the proceeds.

That also means that couples selling a jointly owned home can contribute up to $600,000 of the proceeds, between them provided total contributions don’t exceed the sale price of the property.

Home owners must have owned the home for ten years or more prior to selling it and make downsizer contribution within 90 days of receiving the proceeds of sale.

Downsizer contributions won’t be counted under contribution caps but will be taken into account for determining your eligibility for the age pension.

Mercer Financial Advice Leader, Richard Ebbs, warns retirees to approach the scheme with caution.

“Just be careful about downsizing contributions - they could have Centrelink implications,” Ebbs says. “Your primary residence is not counted against the assets test, but if you sell it and put the proceeds into super, that money is counted.”

“The main benefit of super is that it offers lower tax rates, but if you get an Age Pension you’re probably on a low tax rate anyway.  You’ll need to weigh up the benefits of adding to super depending on your personal tax situation and your Centrelink entitlements.”

A Mercer Financial Adviser can help you understand further.

Book an appointment today.

For full details of the scheme, go to the ATO website.


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