Downsizing and its effect on Superannuation

xero myob reckon bookkeeping sunshine coast - expert advice on downsizing

Bookkeeping Sunshine Coast

As of this financial year, a new scheme has come into effect that could really benefit those that are over the age of 65. While you could still be working but want to try to simplify your lives and sell the family home, you can make a downsizer contribution to your preferred superannuation of up to $300,000 from selling your home.

This contribution is on top of any existing contributions that you are already making. It does have some regulations around it. For instance, the home that you are selling can’t be a houseboat, even though it does have “house” in the name. It also can’t be a caravan or mobile home. However, any other type of residence should be recognized.

This is only a new initiative as we mention that came into effect as of the 1st of July 2018, so there are still a lot of questions to be answered. This is why a number of clients we serve on the Sunshine Coast have been coming to us at Balanced Bookkeeping and Business Solutions to see their options.

Other things of note, even those the term downsizing implies that you are buying a smaller residency, you don’t actually have to purchase anything. The contribution is calculated on you selling, not buying. There is a window of activity as well, as you have t make the contribution within 90 days of closing the sale on your home. Plenty of time if you want to do what I do and put all the money in a paddling pool and roll around in it. You don’t have too, but when are you going to get that chance again?

One of the big misconceptions out there about the downsizer contribution is that you can claim it as a tax deduction. This is not true, it will have to be claimed on your taxes.

Of course, if you are thinking about claiming this, it is best to get all your personal options from the experts than reading a few general blogs about it. One of the things you should keep in mind is that claiming this scheme could affect your pension if you are currently on one. Best to talk to the bookkeeping experts at Balanced Bookkeeping and Business Solutions for your best options.

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