Downsizing has become a hot conversation topic recently following changes to the way over 65s can top-up their superannuation by selling their family home and moving into a new one.
Since 1 July 2018, homeowners aged 65 or more who have lived in their home for more than 10 years have been able to contribute up to $300,000 per person (or a maximum of $600,000 per couple) from the net proceeds of the sale of their family home into their super fund.
The Federal Government incentive is widely regarded as a great way for homeowners over the aged for 65 to enjoy a financial reward for moving into a less expensive – and usually more practical – property.
The Western Australian government has also jumped on board, supporting integrated seniors developments such as Haven, Ridgewood, in partnership with Pindan and Southern Cross Care WA.
So, what is downsizing, and how do you decide if it could be right for you? According to the Australian Housing and Urban Research Institute (AHURI), there is no “concrete definition”.
“…It might be thought of as one (or more) of a number of options: a household moving to a property that has fewer bedrooms, is physically smaller, is on a smaller sized block of land, or it might be to a dwelling that is simply of lower value in a less expensive area or one that is cheaper to rent,” the AHURI explains.
There are also a wide range of options, from senior living projects such as Haven, Ridgewood to retirement villages, residential or rental villages or buying a smaller, new home, townhouse, villa or unit.
Embracing your future
As people begin to consider their options for down the track in life, it can be a daunting time for most people. When they finally begin to slow down and consider how to maintain the lifestyle they are accustomed to, how to live independently and how to stay socially connected.
Consider these tips to determine if downsizing could suit you:
1. Know how much your current property is worth
If you’ve lived at the same address for 10, 20, or even 30 plus years, chances are the value of your home and suburb has changed during this time. Speak to a local real estate agent or visit websites like reiwa.com.au to find out how much similar homes in your area have recently sold for.
2. Seek advice about tax and pension implications
Use this information the draw up a budget and estimate any transaction costs you may face (ie Stamp Duty and Capital Gains if you sell your family home).
It’s also important to seek financial and legal advice to learn whether the profit you could make from the sale, and any interest you earn afterwards, might affect your pension.
The rules and regulations for buying into a retirement property also differ from buying traditional property so it pays to do your homework.
3. Chat to family and friends
Thinking about moving away from your long-term family home can be emotional – you may have raised your children there, welcomed grandkids, been an active member of your local community and made some fabulous friends. Take the time to discuss the idea of downsizing with your family and friends.
4. Consider your potential lifestyle
Do you love to travel? Would you prefer not to maintain a pool or large garden? Do you care for grandchildren who regularly sleep over? Do you have a lot of belongings that you want to keep or would you be happy to declutter and live with less? Are you in good health or would you like to live near essential services as you grow older? Do you want to stay in the same area or are you keen for a sea-change or tree-change?
These factors and more will help you search for the perfect property, when you are ready to make the move.
The future is bright at Haven, Ridgewood
Southern Cross Care (WA) Inc. has partnered with Pindan to deliver a future-focused lifestyle community known as Haven, Ridgewood. Located on the corner of Lukin Drive and Hinchinbrook Avenue, Haven was master-planned for active over 55s and offers affordable, low-maintenance homes in a vibrant setting.
Richard Nell, Sales Consultant, from Pindan says unlike some communities with limiting leases, Haven, Ridgewood allows financial independence through its freehold house and land packages.
“This means no strata fees or monthly levies and no exit penalties,” he explains. “Owners can buy and sell at any time to take advantage of capital growth and choose how they spend their resources.”