The administrative binding advice means that a person can dispose part of their home and be eligible to make a downsizer contribution. This may assist some members to increase their super balance whilst still having access to their home, however should only be utilised after careful consideration and after obtaining professional advice.
The downsizer scheme, which has been available since 1 July 2018, allows individuals who are 65 years or older and meet the eligibility requirements to make a contribution to their superannuation from the proceeds of selling their home of up to $300,000.
In order to be eligible, the contribution must be from the proceeds of selling a home which meets the partial or full capital gains tax exemption rule and the home must have been owned by the member or their spouse for 10 years prior to the sale. The home must be real property.
The downsizer contribution must be made within 90 days of receiving the proceeds of sale, which is usually at the date of settlement. A 'Downsizer contribution into super' form must be lodged with the relevant superfund either before or at the time of making the contribution.
The potential disadvantage to this strategy is if the remaining interest in their property is later sold, the proceeds of that sale cannot be used in the downsizer scheme. The scheme can only be accessed once even when an individual has not fully utilised the $300,000 cap for downsizer contributions.
Overall this is potentially very useful BUT make sure you seek advice to avoid disadvantaging yourself later.