DomaCom’s equity release approved by ATO for downsizer contributions
The Australian Tax Office (ATO) has confirmed that a part disposal of a home can be claimed as downsizer contributions and this has been extended to DomaCom’s senior equity release.
This would mean that a person would be able to dispose of part of their home under DomaCom’s scheme which would be considered as a downsizer contribution, the firm said in the announcement made today to the Australian Securities Exchange (ASX).
DomaCom reminded that from 1 July,2018, eligible people aged 65 or over were able to make a downsizer contribution into their superannuation of up to $300,000 from the proceeds of selling all or part of their home and this downsizer contribution was not subject to the usual concessional or non-concessional contribution caps and therefore could be still made when the member’s balance exceeded $1.6 million.
The firm confirmed that, according to the research, around 5,000 retirees used this facility in the first year but at the same time a large proportion of retirees would prefer to access the downsizer provisions but still stay in their homes.
Prior to this ATO confirmation it was generally considered that a person had to sell or dispose their entire interest in their home to be eligible to make a downsizer contribution.
“While a residential property cannot be sold to an SMSF, a part interest of a home can be sold to DomaCom’s senior equity release platform which provides cash to the member that they are eligible to contribute to an SMSF, retail or industry superannuation fund,” the firm said in the announcement.
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