THE idea of selling the family home and moving to a smaller home that is more easily maintained and suited to your lifestyle has been around for a long time.
Nowadays, it is often referred to as downsizing, and has become a buzzword since the federal government announced initiatives to encourage more people to do just that. But what do the incentives mean – and will they make a difference for you? Property advisor Ben Reid, managing director of Ian Reid Vendor Advocates, a Victorian business that provides a service to home sellers, explains what the changes could mean for you.
Changes for downsizers
The changes announced in the 2017-18 budget mean that from July 2018, people aged 65-plus who have owned their primary residence for more than 10 years will be able to sell it and contribute up to $300,000 from the proceeds of the sale into their superannuation.
Each member of a couple can take advantage of this measure from the same home sale, meaning a couple can contribute up to $600,000.
It is important to remember, however, that there are a number of rules governing this scheme, so it is crucial you seek professional expert advice before making any decisions in this area.
Can downsizing affect housing affordability?
The idea behind this new policy is to reduce barriers to downsizing, thereby freeing up housing for younger buyers and helping to address concerns about housing affordability.
Of course, this assumption ignores the fact that downsizers will be moving to smaller homes, which are often the target of those first home buyers who have the biggest housing affordability concerns!
Financial advice is vital
One of the reasons we recommend seeking professional financial advice before taking up this incentive is that superannuation is included in means testing for the age pension.
This could mean that by downsizing, many age pension recipients could leave themselves open to a reduction or cancellation of what may be their primary income, not to mention factoring in the costs involved in buying and selling.
Yes, downsizing could be an excellent move for many people as they approach retirement, but like so many things in life, it’s rarely a simple decision.
Avoid the “fatal traps”
Whether you are downsizing or not, when it comes to experienced and independent advice on actually selling your property, vendor advocates are always happy to provide you with up-to-date advice and assistance at any time. Ian Reid Vendor Advocates produces a free booklet, Fatal Real Estate Traps Exposed, which you can download.
- Phone (03) 9430-0000, www.ianreid.com.au