Will you be super-charging your retirement savings by downsizing?

Downsizing the home and contributing the profits into superannuation is becoming an increasingly popular option for Australians as they approach retirement age.

This has been a common strategy for retirees to free up equity in their home and put it towards their retirement savings, while at the same time moving to a property which better suits their changing needs later in life – usually one that is smaller and easier to maintain.

As an added incentive, the Australian Government has announced changes to its downsizer scheme, in a move that it hopes will free up housing stock for younger families.
Eligible Australians aged 55 and over are now able to use some of the proceeds from the sale of the family home to top up their superannuation, under a change in the rules reducing the downsizer eligibility age from 60.

Under the downsizer scheme, you are allowed to contribute up to $300,000 ($600,000 for a couple) from the sale proceeds of your eligible family home.

As reported by the Sydney Morning Herald, while the contribution age has been lowered, there are no changes to the other eligibility criteria that require you to have owned your home for at least 10 years (and be entitled to the CGT main residence exemption) and make the superannuation contribution within 90 days of settlement. You cannot contribute more than the proceeds of the sale, and downsizer contributions cannot be made if the home you are selling is a caravan, houseboat or motorhome – or if you have made a downsizer contribution previously.

Whether to downsize or not is a big decision, with implications affecting your quality of life and financial wellbeing over the next 20 to 30-plus years.

It is important to seek professional financial advice to determine the best strategies for your individual circumstances.

If you do decide that downsizing is the right move for you, Henzells Agency can assist the transition and find the perfect new home to suit your needs. 

Here are some great properties we have for sale that would be perfect for those looking to downsize:

6/1 Esplanade, Golden Beach

2/1 Esplanade, Golden Beach

2/13 Arthur Street, Kings Beach

11/40 King Street, Kings Beach

9/30 Canberra Terrace, Caloundra