ATO Community

Downsizing question

Ask a question
Highlighted

Newbie

Views 341

Replies 8

Hi

 

I am hoping someone can help.

We would like to subdivide our house and sell one half and remain in the other half.

We have lived in our house for more than 10 years and now it is just too big.  We love the location and would like to stay.  We have the ability to subdivide the house and sell off one half.  

Can we use the proceeds of the sale as a downsizer contribution to our super fund?

Thank you

1 ACCEPTED SOLUTION

Accepted Solutions
Highlighted

Best answer

Community Manager

Replies 0

Hi @Downsizer,

 

Thanks for you patience while we looked into this one.

 

@Bruce4Tax is correct; to be able to provide any technical response to your Downsizer eligibility questions and by extension main residence and capital gains tax results, is highly dependant on the circumstances of the arrangement.

 

This ruling provides information regarding Downsizer eligibility and sub-division. However, it does not cover circumstances in which the dwelling is split from the original dwelling and sold. 

 

There are a number of factors that need to be considered including how the arrangement is undertaken, what the ownership structure is and how the disposal of interest is effected, the questions effect not only the Downsizer eligibility but the amount of capital gains tax that may or may not be payable.

 

We would encourage you to apply for administratively binding advice by contacting our early engagement area, so that we can give you a tailored accurate response to your specific circumstances.

 

Thanks

 

KylieS

 

8 REPLIES 8
Highlighted

Devotee Registered Tax Practitioner

Replies 7

I think the answer will depend on the steps you plan to take, so more details please.

 

 

Highlighted

Newbie

Replies 6

We plan on subdividing our house and making it 2 houses on the one block, so it will be an A and B.  Separate access to both houses and a common wall.

We would like to sell the 'B' house rather than rent it out.  

 

If we do this, can this be classified as downsizing?  And therefore make the downsizer contribution to our super fund.

 

thanks for your help.

Highlighted

Devotee Registered Tax Practitioner

Replies 5

OK, that makes it a bit clearer, but it still depends on the details.

To claim downsizer, you must meet very tightly defined requirements.

As far as I understand, the property that is sold must be the house that you owned for at least 10 years  -  not a replacement house on the same land.  

Also assuming that you are over 65.

 

This topic has been raised before, so you should look through the thread at   

https://community.ato.gov.au/t5/General-super-questions/Downsizing-contributions-into-superannuation...

 

 

Highlighted

Newbie

Replies 4

Yes we are over 65.

 

We are not demolishing the existing house, but subdividing the existing house, which we have owned for almost 20years.

 

So if we subdivided the house,did and moved out of the existing address to be new address of 'B' would this qualify for the downsizer contribution as we would be in the 'new' house.

Highlighted

Devotee Registered Tax Practitioner

Replies 0

To me, "subdividing a house" means splitting one house into 2 adjoining dwellings inside the same structure - if that can even be done legally.

 

I think you mean "subdividing the land" into 2 separate titles, with one title occupied by the existing house.

If this is the case, it may work when the original house is sold, but I would to see confirmation form ATO before I did it.

 

 

Highlighted

Community Manager

Replies 1

Hi @Downsizer,

 

We are going to do some research on this one for you.

 

KylieS

Highlighted

Newbie

Replies 0

Thank you, I appreciate it.

Highlighted

Best answer

Community Manager

Replies 0

Hi @Downsizer,

 

Thanks for you patience while we looked into this one.

 

@Bruce4Tax is correct; to be able to provide any technical response to your Downsizer eligibility questions and by extension main residence and capital gains tax results, is highly dependant on the circumstances of the arrangement.

 

This ruling provides information regarding Downsizer eligibility and sub-division. However, it does not cover circumstances in which the dwelling is split from the original dwelling and sold. 

 

There are a number of factors that need to be considered including how the arrangement is undertaken, what the ownership structure is and how the disposal of interest is effected, the questions effect not only the Downsizer eligibility but the amount of capital gains tax that may or may not be payable.

 

We would encourage you to apply for administratively binding advice by contacting our early engagement area, so that we can give you a tailored accurate response to your specific circumstances.

 

Thanks

 

KylieS

 

Top Solution Authors