A mid-tier accounting firm has noticed the inability to find a suitable residence to move into is preventing some retirees from disposing of a property to take advantage of the downsizer contribution provisions.
“I’ve found most of my retiree clients [are living in a house that is] just way too big for them, for example, they never go up to the second level anymore, but they’re not able to find [a smaller property they like] out there and often the apartments they consider are too small,” HLB Mann Judd Sydney wealth management partner Jonathan Philpot revealed at a recent media briefing.
To this end, Philpot noted often these individuals are still looking for a residence with at least three bedrooms.
Fellow HLB Mann Judd Sydney wealth management partner Michael Hutton concurred and suggested retirees were using a particular rule of thumb to assess if a downsized property was applicable for their requirements.
“They talk about the Christmas Day test. That is, if the family comes over on Christmas Day, [will they be able] to fit the whole family in [the new home],” Hutton noted.
Further, Philpot acknowledged the reduction of the qualifying age limit for downsizer contributions to 55 introduced in 2022 has not made a noticeable difference in the take-up of the measure.
“When it was first introduced, I thought this was a really good idea [and that] there will be a lot more people take this up, but I’ve never really seen a pick-up there at all,” he said.
Hutton suggested individuals aged 55 are perhaps reticent to use the downsizer contribution provisions as the money will not be accessible to them for a significant period of time to come.
The accounting firm also recognised the property prices in markets such as Sydney are also acting as a discouragement for the use of the downsizer contribution opportunity as retirees are finding any replacement home is too expensive for their circumstances.
