Spring is when the boards go up around Ballarat. If you have been circling the idea of selling for a year or two, this is usually the season it becomes real.
Before the sign goes in the front yard, there is one rule worth understanding, because it stops being available the moment you leave it too late.
The downsizer contribution
From age fifty five, you can put up to $300,000 from the sale of your home into super. For a couple, that is up to $600,000 between you, even if only one of you was on the title.
The unusual part is what it does not count against.
It sits outside the normal contribution caps entirely. It is not concessional, it is not non concessional, it does not use any of your carry forward. There is no work test. Your existing balance does not disqualify you from making it.
For people who have spent thirty years with most of their wealth locked up in a house and comparatively little in super, this is the one rule that genuinely moves the needle.
The name is doing you a disservice
You do not have to downsize.
You can sell and buy something larger. You can sell and rent. You can sell and move in with family. You can sell and buy nothing at all.
The rule cares about one thing: that you sold a home you or your spouse owned for at least ten years and that qualified, at least partly, for the main residence exemption.
Plenty of people rule themselves out because they read the word downsizer and assumed it meant moving somewhere smaller.
The ninety day trap
This is the part that catches people.
The contribution has to be made within ninety days of settlement. Not ninety days from when you decide, or when the money finally clears, or when you get around to it after the move.
Ninety days from settlement.
Moving house is chaotic. There are boxes, there is a new address, there is often a parent or a health issue somewhere in the background, which is frequently the reason for the move in the first place. Ninety days goes quickly when you are living out of a suitcase.
You also have to give your fund the right form before or at the time you make the contribution. Afterwards is too late.
The part that needs modelling
Money inside super is treated differently by Centrelink than money in your home.
Your home does not count toward the Age Pension assets test. Once you sell it and the proceeds land in super or the bank, a large part of it does.
For some people the downsizer contribution is clearly the right move. For others it reduces or removes an Age Pension entitlement they were relying on, and the tax saving inside super does not make up the difference.
There is no general answer to that. It depends on your balance, your age, your partner’s age, what you are buying next, and what you want the money to do.
What we do about it
We model this before the house sells, not afterwards.
The order matters. Once settlement happens, the ninety day clock is running and your options have narrowed to whatever was available on the day. Run the numbers first and the decision is already made when the contract goes unconditional.
It is the same principle we apply to everything: the planning happens while you still have choices, not once the choices have been made for you.
If a sale is on the cards in the next year or so, that is worth fifteen minutes of conversation well before the sign goes up.
