The government has passed elements of its housing affordability plan, allowing those over the age of 65 to funnel money from the sale of their home into super.
As of 1 July 2018, Australians aged 65 and over who are selling a home they’ve owned for at least 10 years will be able to funnel up to $300,000 of the proceeds into their superannuation accounts.
This is “over and above existing contribution restrictions”, Treasurer Scott Morrison and assistant minister, Michael Sukkar MP said in a statement about the First Home Super Saver Scheme (FHSSS).
They said: “The downsizing measure removes a financial obstacle from older Australians who are considering moving to homes that better suit their needs.
“Both members of a couple may take advantage of this measure, together contributing up to $600,000 from the proceeds of the sale into superannuation.
“This will encourage older Australians, where appropriate, to free up homes that no longer meet their needs for younger growing families.”
Simultaneously, first home buyers will be able contribute up to $30,000 into superannuation.
According to the ministers, this means “most first home buyers will be able to accelerate their savings by at least 30 per cent using the scheme”.
“The measures legislated today are part of the Turnbull government’s comprehensive approach to housing affordability,” they continued.
The Treasurer called the incentives a “very significant tax cut” as those first home buyers would be granted the lower rate of tax afforded by putting their money into superannuation.
Speaking at the Association of Superannuation Funds of Australia conference recently, demographer Bernard Salt highlighted a shift in Baby Boomer’s attitudes towards retirement and a corresponding shift in housing and lifestyle desires.
He explained that retirement “now means a work-lifestyle fusion” and that Baby Boomers are set to make retirement “fashionable”.
“Their parents retired, their grandparents retired but they prefer ‘lifestyle change’. So, perhaps we need to start thinking about the ‘lifestyle village’ as opposed to the ‘retirement village’.”
With this in mind, he said Baby Boomers will be assisted in their lifestyle ambitions by the cash liberated by downsizing from the family home.
He identified the top sea change and tree change towns with the over 65 cohorts for downsizing.
These include the NSW Forster-Tuncurry area, the Echuca-Moama region in Victoria and the Queensland Hervey Bay area.
These towns were highlighted for the relative affordability of property compared with capital city properties and the ratio of people aged 65 and older who are not in the workforce.
He also noted that a move from Perth to Albany could free up about $45,000 and a move to the South Australian seaside Victor Harbor-Goolwa could mean an extra $135,000.
With a median house price of $243,000, a move to Ulverstone from Hobart would mean a difference of $167,000.
The FHSSS legislation comes as the Turnbull government announces that Treasury will review the rules that govern the early release of superannuation when it comes to financial hardship and on compassionate grounds.
It will also consider the circumstances under which superannuation assets could be made available to pay compensation to victims of crime.
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