The Government announced from July 1, 2018, a person aged 65 or over will be permitted to make a non-concessional contribution to their superannuation of up to $300,000 from the proceeds of selling their principal place of residence. That residence must have been owned for the past ten or more years. The contributions are to be in addition to contributions currently permitted under existing contribution rules.
The contributions are stated to be exempt from the existing age test, work test and the $1.6 million balance test for non-concessional contributions that may otherwise prohibit the contributions being accepted by the superannuation fund under the current rules. There is a lot of detail that remains unclear including the definition of downsizing and whether you will be required to contribute the actual proceeds from the property sale and whether the contribution amount will be $300,000 per couple or $300,000 each.
Removing the restrictions on non-concessional contributions for people downsizing might help people self-fund their retirement. The proceeds from downsizing a home in this manner are not proposed to be exempt from the Age Pension assets test, which seems to be a missed opportunity to further unlock barriers to downsizing in the current system.
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