Further eligibility age change for downsizer contributions.

Individuals over the age of 55 will now be able to make downsizer contributions now that the Treasury Laws Amendments (2022 Measures No. 2) Bill 2022 received royal assent on 12 December 2022.  From 1 January 2023, those that are eligible can choose to make a downsizer contribution into their super funds of up to $300,000 per person ($600,000 per couple) from the proceeds of selling their family home.

Previously, the Morrison government reduced to age limit for downsizer contributions from 65 or 60 and legislation was passed in July 2022.  Today, the further reduced age limit to over 55s, has widened eligibility for the scheme which was initially introduced to incentivise older Australians to sell to increase the supply of larger homes for younger families.

Eligibility Requirements

• The home must be owned by the eligible contributor (or be the spouse of the owner) for 10 years or more prior to the sale (purchase settlement date to sale settlement date);

• The home must be in Australia and is not a caravan, houseboat, or other mobile home;

• The sale proceeds must be either exempt or partially exempt from Capital Gains Tax under the main residence exemption; and

• The contributor has not previously made a downsizer contribution from the sale of another home or part of the sale of the current home.

Note: If the home was only owned by one spouse and was sold, the spouse that did not have an ownership interest may also make a downsizer contribution, or have one made on their behalf, provided they meet all of the other requirements.

Over 55s will have 90 days from receiving the sale proceeds of their home to make a contribution.  If contributions are made outside of this timeline then the contribution will be deemed ineligible.  It is unlikely the tax office will grant extension in these circumstances.

To discuss the benefits of this scheme or if you have any question about eligibility, please get in touch with us.