Great news for people over age 65 and wishing to downsize their home. The Government quietly introduced a new law before Christmas 2017 that allows people, from 1 July 2018, to contribute excess money unlocked from the sale of their home into super. It is designed to reduce pressure on housing affordability but it’s a huge win for the grey army.
In the past, if you were over 65, you couldn’t contribute to super unless you were still working, which was very frustrating for many.
“Why would you contribute to super” I hear you ask? Well, if the monies are held in a super pension account, there is no tax payable on earnings, income or capital gains! If you held that money outside super in your own name, you may have to pay tax on the earnings, and when interest rates rise, this could be disastrous.
The amount that can be contributed could be as high as $300,000 per person but one point to note is that any amount contributed to super counts towards the Centrelink/DVA income and assets test so this is something that needs to be carefully considered.
To determine whether you are eligible please feel free to call me at the office and we’d be happy to help or you can check out this link. https://www.ato.gov.au/Individuals/Super/Super-housing-measures/Downsizing-contributions-into-superannuation/
If you are considering this, or know someone who might consider this, then please have them contact us before making any plans as the outcomes need to be carefully considered.