While it’s tempting to hold onto the family home because of the sentimental value, the reality is that it may be holding you back from a better lifestyle and a more comfortable financial situation. Downsizing could allow you to find a home that’s more appropriate to your lifestyle, while also freeing up time and money to use elsewhere.
- More funds to invest to create security in retirement or improve your lifestyle.
Downsizing allows you to unlock the equity in your current home to use for investment purposes. If you are lucky, you may be at a point where you’ll be able to pay for your new home with cash.
- Fewer expenses.
Downsizing can drastically reduce your expenses, from cutting your mortgage repayments to slashing your living costs. Energy is one area where you are likely to notice real savings when you move to a smaller property.
Let’s face it – bigger properties can be hard work.
Not everyone wants to spend their life maintaining a larger property or garden. Just think of what you could do with the time it takes to clean and maintain that great big house.
- Lifestyle benefits.
Looking for a sea change or a tree change? Downsizing could provide a great opportunity for you to live in a more desirable location, like beachside or countryside but most importantly in housing that is more suitable for your needs.
- Tax breaks.
In a recent Federal Budget, the Government announced plans to encourage older property owners to downsize. This is intended to help free up larger homes for younger, growing families. Retirees are able to inject substantial sums into superannuation if they sell their home after they reach the age of 65.
The existing voluntary contribution rules for people aged 65 and older (work test for 65-74-year-olds, no contributions for those aged 75 and over) and restrictions on non-concessional contributions for people with balances above the lifetime limit do not apply to contributions made under the downsizing cap.
To qualify, you must have owned your property for 10 years. What’s great about this new initiative is that both members of a couple can take advantage of the measure for the same home. That’s double the current allowance for a couple downsizing to a new home.
However, keep in mind that the proceeds contributed to superannuation will be included in the assets test for any age pension qualification.
Original article by PAUL CHEVERALL