Your home and super – First homes and downsizing

Sept blog 548x333 home

In 2017, the Federal Government announced several measures related to housing affordability and superannuation – the First Home Super Saver scheme and the downsizing contribution.

First Home Super Saver Scheme

The First Home Super Saver (FHSS) scheme was introduced to help first home buyers save for a deposit faster by taking advantage of the lower tax paid within super.

You can make additional contributions to your super account, up to $15,000 per year and a total of $50,000 (note that your normal annual contribution caps apply). When you're ready to buy your first home, you can apply through the ATO to access these savings and the related investment earnings.

If you're considering using the scheme, please ensure you have read and understood all of the rules and criteria, as well as the potential tax implications (including study and training support loans), to make sure the scheme is right for you.

Full details of the scheme are available on the ATO’s website.

Downsizing contribution

Many Australians downsize their home when they retire, motivated by a lower maintenance lifestyle, or to make a sea or tree change. If you're thinking about downsizing, it's important to weigh up the pros and cons to make sure it's the right move for you.

One important consideration is the downsizing contribution that came into effect on 1 July 2018. From 1 July 2022, if you're 60 years or older, and meet the eligibility requirements, you may be able to make a downsizer contribution of up to $300,000 to your super from the proceeds of your home.

Each owner can contribute up to $300,000 (a total of $600,000 for couples) but the total can't exceed the proceeds of the sale. You also have the option of splitting the amount between your accounts.

You can make the downsizer contribution whether you're still working or already retired, as long as you meet the criteria.

The contribution doesn't count towards annual contribution caps, but it does count towards the $1.7 million limit for pension accounts and it will be taken into account for the Age Pension eligibility tests. You can find more info about the contribution and eligibility in our recent blog article.

If you're ready to downsize now our Advice Services team can help you work through the pros, cons and potential impacts.

* Media Super has engaged Industry Fund Services (IFS) ABN 54 007 016 195 AFSL No 232514 to facilitate the provision of financial advice to members of Media Super. Advice is provided by one of our Financial Planners who are Representatives of IFS. Fees may apply. Further information about the cost of advice is set out in the relevant Financial Services Guide, a copy of which can be obtained by calling IFS on 1300 138 848. IFS is responsible for any personal advice given to you by its Representatives.