You know there is something seriously wrong with the tax system when it actively discourages older people from downsizing out of their large family home, even if they outgrew it years ago and they are struggling to pay the heating bill.
So I tip my hat to the Turnbull Government for righting this wrong in last night’s Federal Budget.
Treasurer Scott Morrison announced that people over 65 who have owned their home for 10 years can sell it and make non-concessional contributions of up to $300,000 into their superannuation.
In other words, people can tip a big portion of the home sale proceeds into their super without getting slugged by the tax man.
Both members of a couple can make this contribution from the sale of their home, so an extra $600,000 can go into their super without penalty.
This issue is one of the things that people tell me has been holding them back from downsizing, so I am expecting some loud cheers from my clients.
It makes complete sense to remove the disincentive, particularly when it will help put more homes on the market for growing families at a time when supply is short.
The government has pulled a simple lever which will help contribute to the ‘rightsizing’ of the Australian housing market.
My only question is, why wait until July 2018 to bring it in?