The Coalition has vowed to change the downsizer contribution – again – if it wins government on Saturday.
It has promised to lower the eligibility age from its current 65-year-old threshold to 55. The legislation was already set to change from 1 July so that 60-year-olds could access the scheme. Currently, individuals – singles and both members of a couple – can contribute up to $300,000 to their super. It’s regarded as a non-concessional contribution, doesn’t count towards the contributions caps and can be made even if the total super balance is greater than $1.6 million.
The Coalition also pledged to double the amount of time older Australians have to structure their assets after the sale of their home from one to two years.
The policy would cost $62 million over four years and take effect from 1 January 2023.
Read: How selling and downsizing affect your Age Pension
The aim – apart from winning votes – is to free up an estimated 1.3 million homes, supposedly occupied by ‘empty-nesters’, for younger families.
Feeling the pressure?
Getting older Australians out of their family homes and into something smaller seems to be a driving ambition of this government. But should the responsibility of making housing more affordable be laid at the feet of those aged 65-plus?
Regardless, some homeowners may love this opportunity. But it’s likely that many will ignore it for the same reasons they have always ignored it: they love where they live and don’t want to move away, will find it hard to find a suitable home in the same area and may lose their Age Pension eligibility by tapping into the value of the – exempt – family home.
Read: Explainer – how the ATO defines ‘downsizing’
Prime Minister Scott Morrison says the policy change will give “Australians more choice to decide how they want to live the next stage of their life by removing financial barriers for those wanting to downsize their home”.
“By removing barriers for Australians downsizing to residences that better suit their needs and lifestyle, we are helping to free up larger homes for younger families,” he said.
Labor frontbencher Tanya Plibersek was sceptical, tweeting: “Just wondering how many 55-year-olds are empty-nesters these days? I suspect my kids will be living at home for many years yet.”
Read: Older Australians resist downsizing
Other tweeters showed their cynical side. One wrote: “How can Scott guarantee young families will buy homes [that] downsizing over-55s sell? What’s stopping Tim Wilson from buying his 6th and 7th home?”
Another wrote: “I will be 55 in the not-too-distant future. I will still have kids in school … I will also be working to at least 70 at the rate we’re going.”
Opposition leader Anthony Albanese says Labor will match the government’s “modest announcement” on downsizing if it wins on Saturday.
The government’s Moneysmart website summarises the pros and cons of downsizing.
It urges anyone considering downsizing to take time to consider their needs and to be sure to consider the costs: buying and selling in the same market, real estate agent fees, stamp duty, legal fees, and furniture removal.
Mr Morrison has also unveilled plans to allow first home buyers to withdraw up to $50,000 from their superannuation to get into the property market.
What would encourage you to downsize? If the downsizer contribution to super was exempt from Age Pension eligibility tests would that help? What about if stamp duty on the next purchase was waived? Email [email protected] to share your thoughts.
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