DomaCom Australia Ltd (ASX:DCL) is higher after the Australian Tax Office (ATO) confirmed that a part disposal of a persons home can be made to make a downsizer contribution.
With the ATOs Administrative Binding Advice (ABA) confirming this advice, a person can dispose of part of their home under DomaComs Senior Equity Release platform and be eligible to make a downsizer contribution.
Self-managed super fund (SMSF) retirees can, therefore, sell a part of their property to top up their super using the downsizer contributions legislation and remain living in their home.
“Enjoy a better retirement”[hhmc]
DomaCom CEO 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.
“For investors, DomaComs Senior Equity Release delivers 3% income plus capital growth and may suit SMSFs in accumulation mode as well as institutions seeking reliable long-term income and growth.”
Shares are up more than 9% to 6 cents and have doubled since the close on August 7.
There is no upper age limit or contribution caps on making downsizer contributions which can be made when someone is 65 years or over including an SMSF retiree
The ability to contribute the proceeds of downsizing part of a home into superannuation was one of several measures announced in Australias 2017-2018 Budget to reduce pressure on housing affordability.
From July 1, 2018, eligible people aged 65 or over have been able to make a downsizer contribution into their superannuation of up to A$300,000 from the proceeds of selling all or part of their home.
Not subject to usual caps[hhmc]
Further, a downsizer contribution is not subject to the usual concessional or non-concessional contribution caps and therefore they can still be made when the members balance exceeds $1.6 million.
Whilst 5,000 retirees used this facility in the first year, research indicates that 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.
However, the 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 DomaComs Senior Equity Release.
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