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Downsizer super scheme age eligibility lowered to 55


The eligible age to make so-called downsizer contributions to superannuation will drop for the second time this year, from 60 to 55, in a move designed to free up houses for young people and families.

  • The federal budget will take a $20 million hit over four years as the Albanese government increases the number of people who can participate in the scheme.
  • Almost 50,000 people have taken advantage of the program, which allows eligible property owners to make a one-off post-tax contribution to their super of up to $300,000 when they sell their home. Crucially, the deposit does not count towards their non-concessional super contribution caps.
  • The budget measure featured on the election policy platforms of Labor and the Coalition. Legislation enabling the reduction in the eligible age of participants has passed the House of Representatives and awaits a vote in the Senate. It starts from the beginning of the first quarter following royal assent.
  • This measure provides greater flexibility to contribute to superannuation and aims to encourage older Australians to downsize sooner to a home that better suits their needs, thereby increasing the availability of suitable housing for Australian families.
The age eligibility was dropped from 65 to 60 in a measure that came into effect on July 1 this year.

Pensioner play

Separately, the government has committed $73.2 million over four years from 2023 (and an expected $400,000 a year on a continuing basis) to create incentives for pensioners to downsize their homes. Under Tuesday’s budget measures:
  • The government will extend the asset test exemption period on the sale proceeds, when income-support recipients sell their principal residence, from 12 months to two years.
  • It will also change the income test so that only the lower deeming rate of 0.25 percent is applied to principal home sale proceeds when calculating “deemed income” for two years after the transaction.
  • This measure will reduce the financial impact on pensioners looking to downsize their homes in an effort to minimise the burden on older Australians and free up housing stock for younger families.
  • The cost of this measure will be partially met from within the existing resourcing of the Department of Social Services, Services Australia, and the Department of Veterans Affairs.
Although the measure is expected to cost $9 million in the current financial year and about $20 million a year over the forward estimates, it would also result in personal income tax receipts of about $7 million over the three years from 2024.

The measures to encourage downsizing come as the government strikes a deal with the construction and superannuation industries to build up to 1 million affordable homes and shore up the housing supply.

Under the so-called Housing Accord, participating superannuation funds and institutional investors will receive payments from the National Housing Infrastructure Facility to cover the gap between subsidised and market rents attached to social housing projects. The budget papers note that Australia has a relatively low level of institutional investment in residential real estate, compared with peer countries.
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