Pensioners, self-funded pensioners and older working Australians are being offered new financial incentives to sell their family home sooner and downsize it.
- Scott Morrison will announce the policy at the Liberal campaign launch in Brisbane on Sunday
- The policy will extend a tax break that allows certain proceeds from the sale of a home to be transferred to superannuation
- Sale proceeds will be exempt for another year for retirees selling the family home under the policy
The Prime Minister will use today’s Liberal campaign launch in Brisbane to unveil the new policy, aimed at freeing up bigger homes on the property market for young families.
The policy has two key elements – the first is an extension of an existing tax break allowing up to $300,000 from the sale of a family home to be placed into superannuation without penalty.
The second is another tweak encouraging retirees to sell by exempting proceeds from the sale from the asset test for two years instead of one.
Prime Minister Scott Morrison has said he aims to remove barriers for older Australians to sell their homes and put larger properties on the market for those looking to enter.
“We are now giving Australians more choice in deciding how they want to live the next stage of their lives by removing financial barriers for people wanting to downsize their homes,” Mr Morrison said.
“By removing barriers for Australians choosing residences that better suit their needs and lifestyle, we are helping to free up bigger homes for young families.”
Federal Labor also used its campaign launch two weeks ago to launch a housing policy, outlining an equity investment program aimed at helping people buy into the marketplace.
Changes to Super Rules
Under current rules, anyone over the age of 65 can sell their 10-year-old or older home and put $300,000 of the proceeds into their superannuation.
The $300,000 amount is outside the contribution limits and therefore attracts significant tax breaks.
Couples can double the benefit and each contribute $300,000 to their retirement pension.
The age limit was already to be lowered to 60 from July 1, but the Coalition has promised to lower it to 55 in the event of re-election.
The policy was first introduced in the 2017-18 budget, but has seen relatively low uptake since then.
Some housing policy experts have pointed to evidence suggesting that many older Australians are emotionally attached to their properties and are unlikely to be motivated by financial incentives.
Retirees encouraged to sell
Retirees looking to sell their home face significant penalties because if the family home is exempt from the asset test, the proceeds of a sale are included.
This means that retirees are effectively discouraged from selling their home and buying or renting a smaller, cheaper property.
Currently, retirees are given a one-year post-sale grace period to buy a new home or organize their assets, during which time the money from the sale is exempt from the asset test.
The new policy would double that period to two years from January 1, 2023.
The government expects the policy to have a relatively low cost to the budget, estimating a cost of $62 million over four years.
Nearly 2 million retirees currently own their homes.
Labor announces advanced manufacturing fund
Federal Labor also detailed a new policy, announcing that it will create a billion-dollar fund to invest in advanced manufacturing projects if elected.
The money would come from the National Reconstruction Fund already announced by the Labor Party.
The fund would provide loans, guarantees or equity to companies seeking to expand their advanced manufacturing operations, operating in a manner similar to the Clean Energy Finance Corporation.
An independent board would make investment decisions, but Labor said it would prioritize supporting innovation and creating new jobs.
Labor has previously indicated it will honor contracts already signed under the government’s similar $1.3 billion modern manufacturing initiative.
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Post 50 m ago 50 minutes ago sat. May 14, 2022 at 7:42 p.m., update 10 months ago10 minutes agosam. May 14, 2022 at 8:22 p.m.