The downsizer contribution is an after-tax contribution. Therefore when it hits your SMSF or super fund, no tax is payable on the way in. It also means upon retirement, and it can be paid as a benefit. A benefit that is returned tax-free when you withdraw the funds from your SMSF
Last week parliament passed legislation, resulting in the downsizer contribution to allow house owners over the age of 55 to access this strategy. The lowering to age 55 is expected date for the enactment would be later this year (2022)
Downsizer contributions help you to increase your super balance. The downsized strategy a great way to catch up on lost retirement savings and grow your retirement nest.
Do you qualify to meet the downsized contribution strategy?
Per the ATO there are some of the eligibility criteria you must satisfy are:
• The home must be in Australia, have been owned by you or your spouse for at least ten years, and the disposal must be exempt or partially exempt from capital gains tax (CGT).
• You have not previously made a downsizer contribution to your super from selling another home or from the part sale of your home.
• Before (or at the same time) making your contribution, you must provide your fund with the ‘Downsizer contributions into super form.’
The downsizer contribution strategy can work for many who meet the downsizer criteria. It means your investments can grow in a protected environment at a low or upon retirement in the pension phase with no tax environment. This, together with other strategies, can form part of your retirement strategies.
Talk to Geoff, who specialises in SMSF advice and small business exit strategies to help businesses transition from business to enjoyment by unlocking their wealth from large family homes and businesses.