Many Australians own a home. However, selling that home can also help boost your superannuation balance. As a result, many retirees use the downsizer measure to add to their super, which can provide tax benefits and long-term financial security.
How the downsizer contribution works
The downsizer measure allows eligible individuals aged 55 and over to contribute up to $300,000 from the proceeds of the sale of their principal place of residence into their super fund. Couples can each contribute $300,000.
Unlike other super payments, these contributions do not count towards annual limits, making them an easy way to grow retirement savings. Since 2018, more than 78,600 Australians have used this measure.
Who uses the downsizer measure?
The Australian Taxation Office (ATO) reports that more Australians choose this option yearly. While contributions can start at 55, most participants are between 65 and 74. In the last financial year, almost 13,000 Australians added $3.38 billion in superannuation contributions from home sales. This trend shows that more retirees are using this option to strengthen their financial future.
The benefits of superannuation contributions through downsizing
Selling a home and adding the proceeds to superannuation contributions has many advantages. First, earnings in a super account are tax-free in pension phase. In addition, super savings are easier to manage for long-term financial planning. Lastly, increasing super balances helps retirees feel secure about their future and reduces financial stress.
Essential things to know before downsizing
Before making a superannuation contribution, retirees need to understand the rules. For instance, the home must be owned for at least 10 years before selling. Also, you’ll need to make contributions within 90 days of settlement. Downsizing may also affect the Age Pension eligibility. Because of this, seeking advice from a Geelong financial planner at LBW can help ensure the best decision is made.
How LBW’s Geelong financial planners can help
Using a Geelong financial planner helps give you explicit guidance on superannuation contributions through downsizing. The financial planner will offer personalised advice to help you secure your financial future. If you’re considering downsizing or are wanting to grow your super, our Geelong financial planners are here to help.
Contact LBW today at (03) 5221 6111 to schedule an appointment with one of our Geelong financial planners.
This blog provides general educational information only. The content does not take into account your personal objectives, financial situation or needs. You should consider taking financial advice tailored to your personal circumstances.
LBW Business + Wealth Advisors is an Authorised Representative of LBW Wealth Pty Ltd ABN 56 652 382 128 AFSL 534569. Please see our website www.lbwca.com.au or call 03 5221 6111 for more information on our available services.
