The rules are set to be rolled out on July 01
The federal government has made two notable adjustments to housing-related super provisions that will benefit both first home buyers and downsizers. Both take effect on July 01.
For those approaching retirement, the bill reduces the eligibility age at which someone can make a downsizer contribution to their super from 65 to 60 years old.
The home being sold must have been owned for at least 10 years and partially exempt from capital gains tax to qualify.
“This will allow [older] Australians to consider downsizing to homes that better meet their needs, increasing the supply of larger homes for young families,” Treasurer Josh Frydenberg and Housing Minister Michael Sukkar said in a joint Press release, adding that 36,800 individuals have contributed $8.9 billion to their superannuation under this measure from July 2018 to January 2022.
But the tweaked rules would not make a huge difference to most 60-year-olds who were already planning their retirement, one financial planner from Nest Advisory Group, Nick Lucey, said in an interview with Central Western Daily.
Read next: How does the First Home Super Saver Scheme work?
“[For a] 60-year-old who might choose to downsize their $1.5 million home to a $1 million home ... under the current rules, without using the downsizer contribution, they can still make a contribution to super anyway,” he explained. “They’ll just make it under the non-concessional contribution caps, which they can bring forward three years depending on their super balance.”
For prospective first home buyers, the bill has increased the maximum amount of voluntary contributions that can be released under the First Home Super Saver (FHSS) scheme from $30,000 to $50,000. Annual contributions remain capped at $15,000.
The scheme aims to enable home buyers to save a deposit faster by using the concessional tax treatment of super (15%), compared with the marginal tax rate that could be up to 47%.
Not all financial planners are convinced the amendment is enough to lure first home buyers into the scheme, however.
“There’s a lot of red tape around [the FHSS scheme], there’s a lot of uncertainty, and it’s hard for first home buyers to get advice on it,” Lucey said.
Many first home buyers would rather buy an apartment using the government’s 5% deposit scheme rather than spend time accumulating a large deposit via the FHSS, Central Western Daily reported.
