In New Legislation, SMSF

Thinking of selling your home in the next financial year?

You may be able to take advantage of the Downsizer Contribution as passed in the May 2017 budget changes. The basic details are that individuals who are home owners can from the proceeds of sale of their principal place of residence, each contribute up to $300,000 to superannuation. This special superannuation contribution will not be affected by the work test and can still be made even if they have a total superannuation balance of $1.6m or more. This measure is to apply to contracts entered into on or after 01/07/2018.

To qualify as a downsizer contribution all the following conditions must apply:

  1. Contribution must be in respect of an individual aged 65 years or over – aged 65 years or over at the time contribution is made.
  2. Contribution of proceeds from the disposal of a qualifying dwelling – Contribution must be an amount equal to all or part of the capital proceeds received from the disposal of an ownership interest in a dwelling. This means that the amount of the contribution cannot exceed the proceeds received from the disposal.
  3. 10 Year Ownership Test – An individual or their spouse must have owned the dwelling for at least 10 years just prior to disposing of it. The 10-year period is calculated from the day ownership of the dwelling commenced to the day it ceased.
  4. Disposal qualifies for the CGT main residence exemption – This requires that any capital gain or loss from the disposal of the interest in the dwelling is fully or partially disregarded for CGT purposes under the main residence exemption
  5. Choice to treat contribution as downsizer contribution – You must make a choice to treat a contribution as a downsizer contribution. The choice must be made in the approved form and given to the superannuation fund at or before the time the contribution is made.
  6. Contribution must be made within 90 days – The contribution must be made within 90 days after ownership of the dwelling changes.

 

If this sounds like something you might be interested in please make an appointment to speak with Troy Tatam or Paul Tierney.

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