If you are considering downsizing, it’s important to do the research and determine what you are entitled to, in terms of government resources. The government does offer incentives for seniors who are looking to downsize. You can take these tax benefits and advantages into consideration during your planning stage. Of course, you need to first determine whether you are eligible to receive these benefits.
For many, the decision to downsize or not isn’t tied to finances. However, that doesn’t mean you shouldn’t maximise the resources that are available to you in terms of government resources and incentives. They are there to be used so, it’s important that you take the time to educate yourself on what options are available to you before you make any moves to start the downsizing process.
New Incentives for downsizing
So, what government resources are available for downsizing? The newest incentives took effect in July of 2018. For people over the age of 65, there is an after-tax contribution available of up to $300,000 paid into your superannuation fund. This is from the proceeds of selling your primary residence (of 10 years or longer). If you have a partner, you are both allowed to use this incentive, which will double your non-concessional contribution.
This incentive is incredibly valuable for people over the age of 75. Before this legislation, they were not able to make super contributions when selling their primary home, but now they can. Additionally, if you have worked 30 consecutive days (at least 40 hours) in the current financial year, you can make voluntary contributions (aged 65 to 74).
The entire idea behind this legislation is to encourage and allow people to move into homes that are more appropriate for their current needs. This will, in turn, free up larger homes for families who need them. Almost 20% of Australians over 50 who have failed to downsize believe this incentive is enough to allow them to do so.
Some additional Incentives
What government resources are available for downsizing? In addition to the legislation we discussed above, there are other options. It varies by state and it all depends on which one you live in. Western Australia was the first state to offer incentives for downsizing, and as a result, other states were inspired to also follow suit. In fact, WA beat the government by a year with their incentive offering. The stamp duty concession facilitates savings of up to $15,000 for seniors. In addition to offerings in your own state, you may find that you have more options if you are planning to downsize by moving from one state to another.
The only move that would make it unlikely that you can take advantage of incentives is if you plan to sell up and move abroad to settle down. However, the best way to find out what is available to you, and what you are eligible for, would be to seek out advice from a financial adviser. It’s always in your best interests to seek advice from professionals before you take any official steps into the process.
Read more Downsizing Tips
Add Comment