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Downsizing

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My wife and I own and live in a large 5 bed, 3 bath house and at 75 years (and our family has long gone), it is too large.  About 5 years ago we saw this coming and built a small house on another property, in preparation for this event.  Meantime we have been renting the small house (Airbnb) and making continuous improvments to the property in preparation for the next stage.

Can we use the Downsize tax facility and put money from the sale of the large house into Super?  We will not be purchasing a new property, but will simply move into the smaller house.

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ATO Certified Response

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Hi @Super_Song99

 

Thanks for your post.

 

@Bruce4Tax is correct. As long as you meet all of the eligibility criteria as outlined in @Bruce4Tax's post and on our website (which you say you do), you can take advantage of the downsizer measure.

 

While it is called the downsizer measure, there is no obligation to downsize by purchasing a smaller home, whether that be in size or value. In fact, there is no requirement for you to purchase another home.

 

For more information, refer to the downsizing contributions into superannuation page on our website.

 

The fact that you already own the property that you intend to live in after you sell your current home is perfectly fine. The property could be bigger, smaller, cheaper, dearer, yet to be purchased or already owned. Whatever the situation, as long as you meet the criteria you can take advantage of the downsizer measure.

 

Hope this helps.

 

Thanks,

 

ChrisR

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ATO Certified Response

Devotee

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So long as you can yes to all of the below points

 

More info on the website - https://www.ato.gov.au/Individuals/Super/Growing-your-super/Adding-to-your-super/Downsizing-contribu...

 

You will be eligible to make a downsizer contribution to super if you can answer yes to all of the following:

  • you are 65 years old or older at the time you make a downsizer contribution (there is no maximum age limit)
  • the amount you are contributing is from the proceeds of selling your home where the contract of sale exchanged on or after 1 July 2018
  • your home was owned by you or your spouse for 10 years or more prior to the sale – the ownership period is generally calculated from the date of settlement of purchase to the date of settlement of sale
  • your home is in Australia and is not a caravan, houseboat or other mobile home
  • the proceeds (capital gain or loss) from the sale of the home are either exempt or partially exempt from capital gains tax (CGT) under the main residence exemption, or would be entitled to such an exemption if the home was a CGT rather than a pre-CGT (acquired before 20 September 1985) asset
  • you have provided your super fund with the Downsizer contribution into super form either before or at the time of making your downsizer contribution
  • you make your downsizer contribution within 90 days of receiving the proceeds of sale, which is usually at the date of settlement
  • you have not previously made a downsizer contribution to your super from the sale of another home.

Initiate

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Thank you for the excellent information.  We answer Yes to your list of qualifications, but...

Does "Downsizing" involve or require the purchase of another house or unit? 

If so, does this next house need to be physically smaller (in area) to justify Downsizing? 

Downsizing implies being smaller, but does this mean Smaller in Size, or does it need to be Smaller in Value (compared with the original house to be sold?).  For example a small house in an expensive area could cost more than the sale of the original large home.  So would this still be Downsizing?

If we already have a smaller house ready for us to occupy when we sell the current Family House, will current ownership of our next house have any impact on this process?

 

 

Most helpful response

ATO Certified Response

Community Support

Replies 0

Hi @Super_Song99

 

Thanks for your post.

 

@Bruce4Tax is correct. As long as you meet all of the eligibility criteria as outlined in @Bruce4Tax's post and on our website (which you say you do), you can take advantage of the downsizer measure.

 

While it is called the downsizer measure, there is no obligation to downsize by purchasing a smaller home, whether that be in size or value. In fact, there is no requirement for you to purchase another home.

 

For more information, refer to the downsizing contributions into superannuation page on our website.

 

The fact that you already own the property that you intend to live in after you sell your current home is perfectly fine. The property could be bigger, smaller, cheaper, dearer, yet to be purchased or already owned. Whatever the situation, as long as you meet the criteria you can take advantage of the downsizer measure.

 

Hope this helps.

 

Thanks,

 

ChrisR