How do the Budget Changes Affect Downsizers?
Article by Rachel Lane and Noel Whittaker
This year’s budget had some wins for downsizers, but they weren’t in the headlines.
The governments big ticket item – aimed at creating an “incentive to downsize” – is likely to appeal to self-funded retirees and those who are currently deemed “to old” to contribute to superannuation.
The incentive will commence on 1 July 2018, with people over 65 who choose to downsize their home, able to contribute up to $300,000 from the proceeds of the sale of their home to their superannuation.
The measure will apply to the principal home, where that home has been owned for 10 years and is a per person allowance – so couples will be able to contribute $600,000. The work test will not be applied, those over the age of 75 will be able to contribute and the contributions will be allowed to exceed the concessional caps, including the $1.6m balance.
The reason we say it is likely to appeal to self-funded retirees is because the money placed into superannuation will still be assessable for the pension assets test.
But that doesn’t mean pensioners miss out.
The Pensioner Concession Card (PCC) will be restored for people who lost their pension as a result of the changes to the assets test. This will allow these non-pensioners to maintain their current Commonwealth benefits and receive discounts and concessions offered by states, territories and private providers. The new Pension Concession Card will be available from 9 October 2017 and will not be income or asset tested.
Age and Disability Support pensioners will be able to receive a one-off Energy Assistance Payment, which is $75.00 for singles and $62.50 for each eligible member of a couple. Payments will be made in the week commencing 26 June 2017, and is not taxable and counted as income for pension purposes.
EXCLUSIVE OFFER – VILLAGE GURU COMPLIMENTARY ASSESSMENT:
If you’re thinking it’s time to downsize and would like to understand the impact the recent budget announcement and 2017 pension changes could have on your finances, Ingenia Lifestyle invite you to access an exclusive invitation for a FREE Five Question Pension Test with The Village Gurus.
Please call 1300 855 770 for more information.