The idea of selling the family home and moving to a smaller home that is more easily maintained and more suited to your lifestyle as you get older has been around for a long time. Nowadays, it is often referred to as “downsizing”, and has become an even more popular topic since the Federal Government announced new initiatives to encourage more people to do just that.
Changes for downsizers
The changes announced in this year’s Budget mean that from July 2018, people aged 65-plus who have owned their primary residence for more than 10 years will be able to sell it and contribute up to $300,000 from the proceeds of their sale into their superannuation.
It is worth noting that each member of a couple can take advantage of this measure from the same home sale, meaning a couple can contribute up to $600,000 under this scheme. It is also important to remember, however, that there are a number of rules governing this scheme, so it is crucial that you seek professional expert advice before making any decisions in this area.
Can downsizing housing affordability?
The idea behind this new policy is to reduce barriers to downsizing, thereby freeing up additional housing for younger buyers and helping to address current concerns about housing affordability. Of course, this assumption ignores the fact that people who are downsizing will be moving to smaller homes which are often the target of those first home buyers who have the biggest concerns about housing affordability!
Financial advice is vital when downsizing
One of the reasons we would recommend seeking professional financial advice before taking up this incentive is that superannuation is included in the means testing for Aged Pension. This could mean that by downsizing, many seniors who are receiving the aged pension could leave themselves open to a reduction or cancelation of what may be their primary income, not to mention factoring in the costs involved in buying and selling a property.
Yes, downsizing COULD be an excellent move for many people as they approach retirement, but like so many things in life, it’s rarely a simple decision.
Advice on selling your home
Whether you are downsizing or not, when it comes to experienced and independent advice on actually selling your property, our Vendor Advocates are always happy to provide you with up-to-date advice and assistance at any time. You’ll also find lots of helpful tips in our booklet, “Fatal Real Estate Traps Exposed”. It’s free, so why not download a copy while you’re here?