Downsizing rules & CGT concessions on the family home
If you are close to your retirement, you might think about arranging your finances, right? For this, you may consider downsizing your home due to several reasons encompassing financial freedom to lifestyle preferences. However, you might find the process complex to navigate due to ATO regulations. Thus, it is important to seek guidance from CGT Accountants Wollert to know the full canvas of opportunities and complexities. Selling your primary residence is generally exempt from capital gains tax, and you can leverage additional concessions as a downsizer contributor. This enables you to contribute a major sum to your superannuation funding.
Key Rules for Downsizing Your Primary Residence
You can leverage the advantage through the main residence CGT exemption rule set by the ATO. But there are some key considerations to meet this eligibility, such as:
- Dwelling must remain your residence throughout the ownership period
- You shouldn’t have used it to earn income, such as renting
- You can only claim the CGT exemption in one property at one time
However, partial exemption may apply if you have used the home for earning rental income. Also, if it was only your primary residence for a part of the whole ownership duration. Therefore, seeking CGT Services Wollert is crucial to have clarity on paying tax if it’s applicable in your case.
Understand Downsizer Contribution Concessions
The scheme allows you to boost your superannuation funding, no doubt, through the sale of your property. However, be sure to discuss your plan with Property Tax Accountants Wollert to avoid problems later.
- Age & Property Possession
You can be eligible as a downsizer contributor if your age is 55 years old and older at the time of contribution. You must own the home for at least 10 years, and it must be inside Australia. Moreover, the sale of your house must be fully or partially exempt from capital gains tax.
- Contribution Allowable
While downsizing your home, you are allowed to make a contribution of 300000 AUD to a superannuation fund. Your spouse can also contribute the same amount, which is considered 600000 AUD per couple. However, you must make this contribution towards the fund within 90 days of the sale settlement, and it is tax-free.
Understand Financial Considerations of Downsizing
Downsizing refers to the sale of a large property to buy a smaller one, which potentially unlocks home equity. This can increase your retirement funding, or you can use it to generate more income. Hence, understanding the financial implications of home equity is crucial before following through downsizing process.
Consult Wollert CGT Accountants for the Right Advice
Besides tax and financial regulations, there are considerations of estate planning involved in the process. They may encounter you as an inheritance of property and family dynamics. Hence, taking the right decision about downsizing your home may seem a bit challenging. Subsequently, you need to consider Wollert CGT Services from the Kirpa Tax Accounting firm. We have valuable insights about the downsizing process and can help you make an informed decision.
FAQ’s
What is downsizing a family home all about?
It refers to selling your existing residential property and moving to shift in a smaller and affordable one. You can be eligible to contribute some of the sale proceeds to a superannuation fund.
How much contribution can I make through downsizer superannuation?
If you are eligible, a contribution of 300000 AUD is allowed per person into a superannuation fund. Consult Kirpa Tax CGT Accountants Wollert for more information.
What is the eligibility for downsizer superannuation contribution?
You must be 55 years or older at the time of contribution and must hold home ownership for at least 10 years. The abode must be your chief residence.
Does downsizing contribution count towards concessional/non-concessional caps?
As per Property Tax Accountants Wollert, it won’t count as concessional and non-concessional caps. But the contribution counts towards your superannuation fund balance.
Is there any time limit for making a downsizer super contribution?
You must submit your contribution within 90 days of your home downsizing proceedings. ATO may grant an extension in some cases, but it is not always guaranteed.
How can you help me with downsizing my superannuation contribution?
Kirpa Tax guides you to navigate through the complexities of downsizing and superannuation contributions. We ensure maximum financial benefit for you with tax laws compliance.
Why should I consult Kirpa Tax for the downsizing contribution?
Our CGT Services Wollert ensure maximized tax savings for you with the avoidance of penalties and errors. We handle paperwork and assess potential capital gains tax exemptions for you.