For owner-occupiers nearing retirement or simply looking to scale down to a smaller, more manageable home, the Australian government offers a range of grants and incentives designed to make downsizing more affordable. These schemes aim to help eligible individuals maximise the financial benefits of selling their larger properties and transitioning to new homes, including off-the-plan purchases. If you’re considering downsizing, here’s a detailed overview of the available options.

1. Downsizer Contributions to Superannuation

Introduced in 2018, the Downsizer Contribution Scheme allows homeowners aged 55 and over to contribute up to $300,000 from the sale of their home to their superannuation fund. Couples can contribute a combined total of $600,000, significantly boosting their retirement savings.

Key points:

• The property must have been owned for at least 10 years and served as the main residence.
• This contribution does not count towards standard superannuation contribution caps and it can be made regardless of your total super balance.

This incentive offers substantial tax benefits for those looking to make the most of their property sale while securing a financially stable retirement.

2. Stamp Duty Concessions for Off-the-Plan Purchases

For those downsizers looking to purchase a brand-new or off-the-plan apartment, there are valuable stamp duty concessions available in Victoria. Downsizing into off-the-plan properties can significantly reduce the upfront costs thanks to these discounts, which are particularly beneficial in locations like Sandringham and Burwood.

Here’s how the concession works:

• Buyers pay stamp duty only on the land value at the contract date, not the full property value once construction is complete.
• This can lead to significant savings, especially when compared to purchasing an established home.
• Eligibility requirements vary, but downsizers purchasing off-the-plan properties are often able to take full advantage of these concessions if the property will be their principal place of residence.
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3. First Home Owner Grant for Over 60s

While typically aimed at younger buyers, some states offer variations of the First Home Owner Grant (FHOG) for those over 60 who may be purchasing a home for the first time later in life. This is especially relevant for downsizers who may not have previously owned property or are looking to purchase a new or off-the-plan home for the first time.

In Victoria, this grant can provide up to $10,000 towards new homes valued at up to $750,000, a helpful boost for retirees or downsizers looking to secure a new, lower-maintenance home.

4. Home Equity Access Scheme

The Home Equity Access Scheme is available to retirees who may need extra income but want to avoid selling their property. This scheme allows homeowners of pension age to borrow against their home’s value, receiving payments fortnightly. Downsizers who sell their larger property and move into a smaller one can still access this loan to supplement their income without compromising their Centrelink benefits.

This incentive is especially beneficial for those transitioning to off-the-plan properties as it offers flexibility during the construction phase and beyond, providing a financial cushion until the new home is ready for occupation.

5. Age Pension Asset Test Concessions

For those who rely on the Age Pension, downsizing can sometimes affect the asset test, which determines pension eligibility. However, changes introduced in 2023 offer a 24-month concession period, during which the proceeds from the sale of a larger home are exempt from the assets test. This allows downsizers to transition without immediate impact on their pension entitlements, offering peace of mind during the process of purchasing a new home, particularly off-the-plan properties.

Why Consider Off-the-Plan for Downsizing?

Off-the-plan apartments are becoming an increasingly popular choice for downsizers for several reasons:

• Cost efficiency: With stamp duty concessions and lower maintenance costs, these homes can offer significant financial savings.
• Modern amenities: New developments often come with modern facilities and energy-efficient designs, which can reduce utility costs and enhance comfort.
• Customisation options: Many developers allow off-the-plan buyers to tailor aspects of the home to their preferences, ensuring a property suited to their future needs.

Final Thoughts

With government incentives designed to ease the financial burden, downsizing into an off-the-plan home can be a strategic move for owner-occupiers looking for a simpler, more affordable lifestyle. Whether you’re looking to boost your retirement savings, reduce upfront costs, or maximise pension eligibility, these grants and concessions can provide significant support throughout the downsizing process.

Make sure to explore your eligibility for these schemes and consult with a financial advisor to ensure you’re making the most of the opportunities available.

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