Budget may make downsizers delay big family home sale for a year or even longer
The 2017 Budget may make downsizers delay the sale of the family home - and not just because the new scheme doesn't start until July 2018.
Individuals who are already 65 and thinking of selling their home have been urged to consider putting off a sale at least until the legislation has been approved so they don't miss out on an opportunity to top up their super accounts, tax advisers said.
Under the proposal, retirees will each be able to inject up to $300,000 of the proceeds from the sale of the family home into super, three times the new annual limit for post-tax contributions.
They will be able to make the contribution even if they have more than $1.6 million in super savings with any amount over $1.6 million needing to be placed in an accumulation rather than a pension account.
While financial advisers have expressed doubt the scheme would be widely used by retirees looking to downsize, there is another likely delay within the mix.
Australians in their late 50s or early 60s could also be expected to delay the sale of the family home if they are confident of becoming self-funded retirees.
Individuals in their late 50 and 60s might also decide to delay a sale of the family home until they turn 65, if they have other assets that they would like to get into super in the interim.
Of course any net proceeds from the sale of the family home will still be included in the assets test for the age pension, which Mark Beveridge, director of Superfund Partners, told The Australian Financial Review was a major barrier for many retirees wanting to move to a smaller residence.
Following the changes to the pension rules that came in effect in January, for every additional $100,000 of assessable assets, an age pensioner stands to lose $7800 a year of CentreLink income.
Yesterday Property Observer reported on how the budget encourages older residents to downsize.
Last month Property Observer reported on how downsizing will be an important topic in the Budget.