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Contributing the proceeds of downsizing to superannuation

Qualifying dwelling in Australia

Section: 22.4

To make a downsizer contribution, the exchange of contracts for the sale of a qualifying dwelling must occur on or after 1 July 2018.

10 year ownership condition

An individual or their spouse must have owned the dwelling for 10 or more years just prior to disposing of it, whether that ownership interest was held solely, jointly or as tenants in common. This ownership period would usually be from the settlement date of the original contract to purchase the dwelling to the settlement date of the later contract.

If there is a period when land is vacant due to a dwelling having been lost or destroyed or knocked down and a dwelling has been rebuilt or is underway, this vacancy does not stop the 10 year ownership condition from being met. Furthermore, a vacant block which someone has bought and then built a dwelling on and lived in as their main residence may meet the 10 year ownership condition.

Dwelling that is your main residence

Where the proceeds that are being contributed are from the disposal of an ownership interest that the individual held in a dwelling, any capital gain or loss resulting from the disposal must have been exempt or partially exempt from CGT under the main residence exemption, provided that the dwelling is not a houseboat, caravan or other mobile home.

Individuals may not always reside in that dwelling for certain reasons, e.g. the residence status at a particular time may be affected by things like travel, moving house for unavoidable reasons (like a compulsory acquisition, or relationship breakdown), or use of a dwelling to also earn assessable income.

These kinds of individual circumstances do not prevent an individual from making a downsizer contribution if the individual meets all the other criteria.

A downsizer contribution can also be made from the sale of a dwelling that is not a CGT asset because it was acquired prior to 20 September 1985.

Example - Contribution for spouse that did not hold an ownership interest

Rebecca bought her main residence in 2004. Her new spouse, Ben, moves in with her in 2014. Ben lives in the dwelling as his main residence from 2014, and he would therefore qualify for a CGT exemption on the sale of the dwelling if he was on the title.

Rebecca turns 65 in Dec 2018 and decides to sell the dwelling. Ben is also 65 at that time. As Rebecca has met the 10 year ownership period, Ben would also be eligible to make a downsizer contribution.

Last modified: Monday, January 22, 2018