In a statement to the market on Tuesday, DomaCom confirmed it had received advice from the ATO that retirees could sell a part of their property to top up their super using downsizer contributions legislation.
The announcement paves the way for more flexibility in the way retirees can use home equity release, as the downsizer contributions are open to anyone over 65 who is disposing of an interest in a property and there is no maximum super balance limit to make the contributions.
Domacom said it was also open to retirees to continue to live in their home while releasing part of the equity and contributing these funds to super.
“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,” the group said.
“However, the ATO confirmation on a part disposal now means that SMSF retirees can sell a part interest in their home and make a downsizer contribution, therefore also allowing them to stay in their home with DomaCom’s Senior Equity Release.”
While a retiree could not sell their personal residence to their SMSF, through the group’s equity release product they could sell a part interest in their home and then contribute the income generated by the product back into super.
This could help to provide liquidity to cash-strapped retirees who had had their income reduced by lower interest rates and dividends, DomaCom chief executive Arthur Naoumidis said.
“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,” Mr Naoumidis said.
