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Reduction in age eligibility opens super contributions from downsizing to 55-plus

Money Tips

Thinking of downsizing the family home? You can now reap the financial benefits sooner, thanks to a recent reduction in age eligibility for super contributions.

From 1 January 2023, if you’re over age 55, you can contribute up to $300,000 from the sale of your family home straight into your superannuation.

This is the second drop in age eligibility in recent times, on 1st July the age dropped from 65 to 60 and now it’s down to 55 after an announcement in the October Federal Budget.

“It’s been a quick double shift in a few months,” says Chris Murray, Senior Financial Advisor with Crystal Wealth Partners.

“For a lot of people, they really don’t access their super until they are over 60, and so now we’ve got an opportunity for people around 55 and up, they’re looking at retirement and they can say, ok I’ll put the money in, and it’s locked up for at least five years, but maybe I’ll keep it in there for longer.”

It depends on your stage of life but downsizing sooner can help prepare you financially for retirement.

“Downsizing was one of those things that was put off until you’re much older, but now you might be able to make the sea change or the tree change sooner. They might be looking in their 40s and saying, how we can do it.”

Chris says the ability to contribute a large chunk of money, tax free, into your super is a big deal.

“It means they can draw off a better retirement income, which is tax-free in retirement.”

The other part to the eligibility hasn’t changed. You must own your family home for at least ten years to make a superannuation contribution from its sale.

“If you’ve had your home for ten years or longer, you get a feel for what you bought it for and what it’s worth today. There’s no tax to sell it and there’s no tax to put money into super and all of a sudden, you’ve got more money to spend.”

The changes will also make a difference for couples of different ages.

“Last year, I had a couple, one was in their 70s and the other was 63. We could put $300,000 immediately into his super because he was over 65, but we couldn’t for her because she wasn’t. We used other contributions to put a similar amount in any way but now, we’ve got an opportunity.”

A word of caution. Make sure you’re downsizing in both size and cost.

“You would hope with a downsize you would have some money to put into super, versus coming from the suburbs and moving into Darlinghurst or somewhere like that where it will probably be one mil for one mil,” he says.

While the most important benefit is a boost to super, Chris says it’s also a great way to contribute to your overall wealth without paying tax.

“It goes into your super tax free and remains tax free for the life of the super. If someone dies, the money will also go to their partner or kids’ tax free.”

The scheme is designed to help fund your retirement.

“At the moment it’s bridging. We’ve got people who came into super later from the 90s onwards, but those coming in now should be fully funded. So, this is another of those fill up measures, it helps the system.”

It’s important to think of super contributions as a long-term investment, to avoid any temporary fluctuations in the market.

“We will have cycles of economic growth and downturn and inflation is the one that’s crept in recently.”

The key for safety in super is in diversification.

“That’s why we don’t have it all in the one place. We have it across the share market here, the international share market, property, fixed interest and with that spread we get there over time. So we smooth the returns versus big fluctuations,” he says.


If you’d like to talk to a financial advisor about superannuation contributions from selling your family home, get in touch with the expert team at Crystal Wealth Partners.

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