Downsizing - when is the right time?
As the decision to downsize is a major one for many, there is no correct answer. The one thing we know is that sometimes the longer you put it off, the harder it can be!
You’ll likely have many discussions with family and close confidantes to help you decide when to downsize. However, if you are in reasonably good health, you can be in control of your own decisions right now!
As you enter your twilight years, you may be one fall away from someone else stepping in to make those decisions for you. No matter how good their intentions are, making the best choice for you could be difficult.
REASONS TO MOVE ON
The question of why you should downsize is often linked to the stage of life you are in or are about to enter. Consider what triggered your desire to know more about downsizing.
If your kids have recently moved out and the empty nest seems just too large, the question of whether to downsize is a natural one.
Is your space just too big for you now, and you seem to wander around lost in the family home?
Perhaps, due to physical needs, you can no longer manage. You want to be close to medical facilities.
Is the maintenance getting you down as see all these five-minute jobs that were a breeze just a couple of years ago have now become a real chore? You may hate relying on people to help you to do the simple things around the home.
Maybe your garden has become overwhelming. You long for a simple veggie patch or just a couple of plants that you could enjoy looking after again without the worry of lawns.
Or possibly your friends have moved away, and you’ve started feeling lonely and isolated.
By downsizing, you may be able to free up some extra cash that has built up over the years. So, you don’t have to be so mindful of every penny you spend.
As of 1st July 2018, if you are over 65 years old, the Australian Government superannuation rules were, if you and your partner have owned your principal place of residence for over 10 years and sell, you were eligible to make a downsizer contribution.
From 1st July 2022, the Government will reduce the minimum age requirement for the downsizer from 65 to 60. This would mean anyone 60 years of age and older will be eligible to make a downsizer contribution. The downsizer contribution allows people to make a one-off after-tax contribution to super of up to $300,000 from the proceeds of selling their home they have held for at least 10 years without any penalty.
This is a great way to top up your superannuation and start earning tax-free income to help you in years to come.
Please talk to your financial advisor to confirm your situation.
If you have reached the eligible age, you may be able to contribute up to $300,000 from the proceeds of the sale (or part sale) of your home into your superannuation fund.
The eligible age is as follows:
- From 1 January 2023, 55 years old or older
- From 1 July 2022, 60 years old or older
- From 1 July 2018, 65 years old or older
There is no maximum age limit.
Some of the eligibility criteria you must satisfy are:
- The home must be in Australia, have been owned by you or your spouse for at least 10 years and the disposal must be exempt or partially exempt from capital gains tax (CGT).
- You have not previously made a downsizer contribution to your super from the sale of another home or from the part sale of your home.
- Prior to (or at the same time) as making your contribution, you must provide your fund with the ‘Downsizer contributions into super form’.
Refer to the ATO website – Downsizing contributions into superannuation
