As you approach retirement, the idea of downsizing your home may appeal. Reasons to move into a smaller residence often include an empty nest with smaller space requirements, the desire for less maintenance or to free up cash so you can tick off a few bucket list items, add to your retirement fund or make other investments. Before you act, it is important to do your research and look at the pros and cons, considering your unique circumstances.
The Downsizer legislation allows you to boost your super
If you have owned the property for 10 years or more and are 55 years or older, you may be able to contribute up to $300,000 from the sale of the family home into your super. This contribution is exempt from the usual work test requirements and doesn’t affect your contribution caps. For couples both can make the most of the downsizer opportunity which means you can potentially contribute an extra $600,000 into your super. There are some strict rules about the timing of these contributions so be sure to check the legislation and speak to your financial adviser.
Moving costs money
Buying, selling, and moving house comes with expenses. You will need to factor in stamp duty, legal and real estate agent fees as well as removalists. You may also require some storage if you want to keep some of your belongings that may not fit in your new home.
How will downsizing impact your lifestyle
Moving to a smaller home comes with a change in lifestyle. A smaller space can mean less flexibility in terms of being able to have family to stay and if you are moving to a new area keep in mind, whilst it may be cheaper you often leave a network of family and friends. This can change your day-to-day routine, so you need to be ready for this. Leaving a family home can also be emotionally challenging. If you have raised your children and have special memories and a connection with your home, it is a big step. You should also consider your future needs. One that is often overlooked is whether a smaller property has space for care giving, should you require it. On the flipside there are also some great places to retire to, where real estate may be cheaper, providing you with the opportunity to free up more cash.
If you are considering downsizing it is important to speak to your financial adviser. They can guide you through the process and do the paperwork so that you maximise any financial benefits you may be eligible for. Get in touch.
General Advice Warning: The information provided in this article is general in nature and does not consider your particular investment objectives, financial situation, or insurance needs; we therefore recommend you seek advice tailored to your individual circumstances before making any specific decisions.
Dobbrick Financial Services (Gympie) Pty Ltd ABN 48 931 205 109 and Dobbrick Financial Services (Ipswich) ABN 86 100 184 521 & DFS Oakland ABN 64 340 527 395 and their advisers are authorised representatives of Fortnum Private Wealth Ltd ABN 54 139 889 535 AFSL 357306.
