Downsizers aged over 55 will soon be able to access incentives to “rightsize” their home, under a new Morrison Government election commitment, which has also been agreed to by the Opposition. The changes will be implemented on 1 July 2022.
The announcement made on Sunday 15 May, encourages older Australians to unlock their home equity and “right size” their home. This will help people over 55 to access their home equity, set themselves up financially and find a home better suited to their retirement lifestyle, contribute to their wellbeing and support longer, independent living, as well as boosting much needed housing supply for younger families.
Details of the change:
- The age of which Australians will be able to downsize their property and invest up to $300,000 per person ($600,000 for couples) from the proceeds of sale into their superannuation fund. Current contribution caps, now set at age 65, and due to be lowered to age 60, will now be lowered to age 55 years.
- Pensioners who downsize will also be given a two-year grace period before the proceeds of sale of the property are subjected to asset testing for the pension. It is intended for this grace period to give Australians time to get their finances in order while still receiving the pension.
Housing Minister Michael Sukkar said this change would give older Australians greater flexibility in choosing to downsize their home and increase housing stock for younger families looking for larger homes. “These changes will directly help in unlocking the supply of larger homes for those younger families who are hoping to expand, and at the same time incentivise older Australians to downsize by putting more into their super,” Minister Sukkar said.
The Property Council of Australia said this was a significant advocacy win after ongoing engagement with the government on this issue. They welcomed the announcement, but said there is also a need for broader action on housing supply, especially to encourage the supply of purpose-built age-friendly communities, to ensure Australians have more affordable and accessible choices.
Downsizing.com.au CEO, Amanda Graham welcomed the changes, saying there were millions of older Australians already considering selling their family home to access home equity and better set themselves up for the next stage of their lives. “The current housing market makes it a great time to downsize - or “rightsize” - and this incentive will make that even more attractive,” she said.