Fractional property specialist investment manager DomaCom has received ATO confirmation individuals can make downsizer contributions from a partial sale of a residence in a move tipped to benefit SMSF members and self-funded retirees.
Specifically it means people will be able to make a downsizer contribution if they dispose of a portion of their home under the DomaCom Senior Equity Release platform.
Until now the downsizer contributions rules dictated retirees had to sell a residential property in its entirety to be eligible to make these types of contributions.
According to the manager, the ATO Administrative Binding Advice ruling means retirees will now be able to top up their retirement savings while retaining the ability to live in their homes through the use of its Senior Equity Release offering.
Further, it will allow greater strategy flexibility for SMSF trustees to shift some of the value of a residential property into their super fund as the governing legislation does not allow an asset of this type to be sold into an SMSF.
DomaCom noted the Administrative Binding Advice from the ATO would potentially provide a boost to retirement incomes currently being adversely affected by the COVID-19 impact on markets and the low interest rate economic environment.
In addition, the manager described the ability to make downsizer contributions from partial residential property sales as a welcome measure for SMSF members and self-funded retirees who have not been able to take advantage of coronavirus financial relief programs such as JobKeeper and JobSeeker.
“The ability for retirees to help themselves by modifying their personal balance sheets and moving some of their financial resources tied up in their home to their super will enable them to enjoy a better retirement,” DomaCom chief executive Arthur Naoumidis said.
“For investors, DomaCom’s Senior Equity Release delivers 3 per cent income plus capital growth and may suit SMSFs in accumulation mode as well as institutions seeking reliable long-term income and growth.”
DomaCom began discussions with Treasury to give retirees the ability to make downsizer contributions from a partial sale of a residence in November last year.
It is important to note the standard eligibility provisions still have to be satisfied before a downsizer contribution can be made resulting from the partial sale of a residence.
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