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Trustee confusion over downsizer age

Trustee confusion over downsizer age

The age constraints associated with the superannuation downsizer contribution rules are causing some confusion among SMSF trustees, a sector administrator and educator has said.

Heffron SMSF Solutions managing director Meg Heffron revealed many of the queries she has been receiving about making a downsizer contribution centres on when an individual has to attain the age of 65 to qualify for this measure.

“We have plenty of people selling their house before 65 and wondering if they can still make a downsizer [contribution]. So don’t forget the only rule is that the person has to be over 65 when they physically make the contribution not when they sell the house,” Heffron explained.

“But remember there are deadlines with all these things and the contribution has to be made within 90 days of settlement,” she added.

“So don’t worry if they’re under 65 when they actually exchange, just make sure they’ve got a long enough settlement to pick that up.”

Heffron noted the downsizer rules do not specify both members of the couple selling the property have to be over 65 only the person who will be making the contribution.

She also stressed there is no upper age limit restricting the ability to make a downsizer contribution nor does an individual’s total super balance prevent them from doing so either.

Heffron pointed out this did not mean other superannuation parameters were also inapplicable to an individual making this type of contribution.

“What I often get asked too is can I put [the downsizer contribution] in my pension account. [The answer is] no. You still have to think about the transfer balance cap and whether the person has room within the $1.6 million pension limit,” she said.

“But we can certainly make a downsizer contribution and leave it in accumulation phase.”

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