Time to downsize?

by Rob Shears

Over the last 3 years, home prices growth has seen some turbulence mostly influenced by the level of interest rates and Covid. We watched the prices drop at the beginning of Covid, then when interest rates were lowered, we saw the property sale prices rocket skywards. Units and house prices are moving at different rates. Now, after a string of monthly interest rate rises, the home sale prices are coming off with house sale prices decreasing at a faster rate than units^. Where property prices will go from here is heavily influenced by the interest rate movements controlled by the RBA.

With property prices dropping, is now a good time to sell and downsize?

Well that depends... where the money goes? You could spend it, bank it or put it ...

Into Superannuation

From 1 Jan 2023, those aged at least 55 years old may be eligible to contribute up to $300,000 each into super by using a Downsizer Contribution. Also, if you haven’t made any Non-Concessional contributions in the last 3 years, you could contribute up to $330,000 each. Altogether, you may be able to boost your retirement savings by $1.26 million (subject to the Total Super Balance cap of $1.7m each at last June 30). That may make a material difference to your retirement lifestyle by providing you with additional tax free income during your draw down years.

With property prices dropping, now could be the time to downsize and increase your lifestyle

Downsizer contribution rules

In summary, the main downsizer contribution rules are:

• The property sold has to be a qualifying dwelling such as a home, unit or apartment. It must meet the CGT main residence exemption.

• You are aged 55 or over from 1 Jan 2023.

• The home was owned by you or your spouse for at least 10 years prior to sale.

• The downsizer contribution is made within 90 days of change of ownership, and

• The contribution is made using the required ATO form.