The Government introduced Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures No 1) Bill 2017 in the House of Reps Thur 7.9.2017. The Bill proposes to allow people aged 65 or over to make additional non-concessional contributions up to $300,000 from the proceeds of selling their home from 1 July 2018.
The measure will apply to sales of a principal residence (excluding a caravan, houseboat or mobile home) that would qualify for a partial or full CGT concession. Either the individual or their spouse must have owned the home for a minimum of 10 years up to the point of sale. If the person's spouse is not on the title with them, both can still make a downsizer contribution. Note that a person is not required to make any subsequent purchase of another dwelling after selling their home and making a downsizer contribution. The measure seeks to reduce a barrier to downsizing for older people to enable more effective use of the housing stock by freeing up larger homes.
This downsizer contributions cap of $300,000 will be excluded from the non-concessional contributions cap. It will also be exempt from the contribution rules for people aged 65 and older, and the restrictions on non-concessional contributions for people with total superannuation balances above $1.6 million. The contribution (non-deductible) must be made within 90 days after the home changes ownership (generally the date of settlement). While the family home is totally exempt from the Age Pension assets test, any sale proceeds from downsizing that are contributed to superannuation will count toward the assets test.
DATE OF EFFECT: Only applies to home sales where the contract of sale is entered into (exchanged) on or after 1 July 2018.
