Your kids left home long time ago, so with time you wonder: "Why do I need such a big house? Who wants to keep cleaning it? Sure as hell I don't?"
Maybe it would be a good idea to sell it and buy something smaller.
Or in another area, or maybe move to warmer parts of Australia if you are from Melbourne that is.
Or maybe your dream is to live in the country, or near the beach or maybe the mountains (that's my plan).
Or just simply, you realise that your home has gone up in value so much.
Why would you keep the money stuck in the house?
Why not extract some beautiful savings by selling it and start enjoying retirement in the way you've always dreamed of:
travel overseas, buy a caravan or a campervan and finally get to know your own backyard - Australia, or spoil your grandkids a bit.
And obviously save a big portion of money in your superannuation fund, boost your super balance a bit,
so you can enjoy financial freedom for the rest of your retirement.
You can actually achieve all those goals utilising the Downsizer Contributions to super.
So today, I will give you a full explanation of this very beneficial type of superannuation strategy,
that can help you to improve your retirement savings and consequently your lifestyle
My name is Katherine Isbrandt from About Retirement, I am CFP and you are watching About Retirement TV,
the place to find out all the information you need to be well prepared for retirement
or to improve your retirement income, assets, cashflow and ultimately your lifestyle if you have already retired.
As Thomas Edison said: "Good fortune happens when opportunity meets with planning" so let's plan your dream retirement.
The Downsizer Contribution was originally introduced by the government in the 2017-18 Budget
and officially available as a super contribution strategy since 1st July 2018.
Downsizer Contribution is only available to you if you are over the age of 65.
A great news is that there is no upper age limit for this type of contribution to be made.
Usually when contributing to super you need to meet eligibility rules.
If you don't know those rules, watch my videos: "Superannuation - all you need to know" which is Part 1
and then Part 2 "Superannuation - Pay less tax"
The Downsizer Contribution limit is $300,000 per eligible person
and your contributions need to come from proceeds of sale of your home.
But this is an one time offer for you to use.
Therefore, if used once, you cannot reapply for Downsizer Contribution ever again, even if you meet all the other requirements.
Downsizer Contributions are not counted as non-concessional contributions,
therefore are not counted towards your non-concessional annual cap. They will however count towards your transfer balance cap.
There is no contribution tax to pay when your contribution enter superannuaion,
but obviously you cannot claim tax deduction for those contributions either.
You can make a Downsizer Contribution even if your total super balance is more than $1.7mil,
but at this point, your super becomes more complex due to transfer caps limits,
so you really need to speak to experienced financial planner, specialising in retirement planning.
And a huge benefit is, that since you are over the age of 65, therefore you have already met conditions of release,
you have an immediate access to that money.
If you want a refresher on Conditions of Release and when you can start enjoying your super savings,
watch my video: "When can I access my super, please?"
If you move your super savings to a pension phase, you will start receiving an income that is tax free
and also, all earnings within the fund are also tax free. That sounds just perfect to me.
So let's now get to know all the rules you have to meet in order to make Downsizer contributions:
1. You must be over age or 65 at the time of making a downsizer contribution,
and as I mentioned, there is no upper age limit
2. Your contribution has to be from the proceeds of sale of your family home,
3. You have owned your home for a period of 10 years or longer.
4. Your home needs to be in Australia -
so if your home is in New Zealand, Thailand, India or any other country, this does not apply.
It has to be an Australian home only.
5. It does not apply to home such as a caravan, houseboat, or any other form of a mobile home.
6. When selling your home, it needs to be eligible for some form of exemption
from Capital Gains Tax under the "main residence" provision,
which means that that property had to be your main place of residence, so your home, at least for some time during its ownership.
7. You have to provide your super fund
the Downsizer Contribution form either before or at the time of the contribution being made.
To make it easier for you, I have included a link to the form below my video, so you can easily download it when needed.
8. The downsizer contribution needs to be made within 90 days
of receiving the proceeds from the sale - which usually is the date of settlement.
9. As I mentioned before, this is only a one-time offer, so if you have done it before, please don't try it again,
it won't work and you could be penalised for deceiving and breaching the rules.
Do you find this information helpful?
Do you think you might want to consider this strategy as a way to boost your superannuation balance for your retirement?
Please leave a comment below my video to let me know your thoughts about this strategy.
And if you have a question, just write it below my video as well.
I reply to every message and every question personally and I do try to do it within 2 business days.
Also, if you see this video as helpful, give it THUMBS UP and SUBSCRIBE not to miss my next video.
I keep forgetting to mention, but in the top banner of my channel, in the right corner,
you should find a link find my eBook: "12 Principles of Investing".
The link is also listed below my video.
Feel free to download my ebook after you finish listening to this video
and then return to watch some more of my videos that explain other fascinating retirement planning ideas.
And next week I will continue with further explanation about the Downsizer Contribution,
I will explain who will benefit from this strategy the most,
I will also list other very important factors you need to remember
or consider before even proceeding with Downsizer Contributions
and I will give many examples how this works in practice in different life situations.
So please connect with me again next week to find out more about the Downsizer Contributions.
I also invite you to visit my website AboutRetirement.com.au,
where you will find lots of additional information, all dedicated to the topic of retirement.
While you are there, sign up to my newsletter to keep up with all changes that might affect your retirement plans.
So now is the time to show you how to find those promised videos:
the first lot is all about other ways
to contribute to super, to be really very well prepared for your retirement.
The second lot of videos is for you if you have already retired
and now you want to maximise your own savings
as well as Age Pension entitlement if possible.
So now, jump to my next video - see you there in a minute.