Property investment company and equity release provider DomaCom has received advice from the Australian Taxation Office that the proceeds from “part disposal” of a home can be used to make a superannuation “downsizer” contribution.
DomaCom said in a statement that prior to the ATO issuing its advice it was generally considered that a person had to sell their entire interest in their home to be eligible to make a downsizer contribution.
According to administrative binding advice issued to DomaCom “a person can dispose of part of their home under DomaCom’s Senior Equity Release platform and be eligible to make a downsizer contribution”.
A retiree could use an equity release product to sell a part interest and remain in their home.
Under the downsizer rules, which were introduced in 2018, a person aged 65 or over can make a superannuation contribution of up to A$300,000 from the proceeds of selling their home.
The measure applies to the sale of a principal residence owned for the 10 years or more. Both members of a couple are able to take advantage of this measure for the same home.
A downsizer contribution is neither a concessional or non-concessional contribution and therefore not counted towards caps on those types of contributions. A person’s total superannuation balance will not affect their eligibility to make a downsizer contribution.