Before making a decision, check out the list of downsizing pros and cons listed below.
If you have chosen to downsize your home, our partners Homesuite can help.
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- Smaller homes may be easier and less costly to maintain.
- Can provide an opportunity to move closer to family members, or to a neighbourhood that is closer to amenities and services that will be useful in later life.
- Any remaining funds after purchasing a lower-priced property can be used to diversify investments, clear debt or supplement retirement income without incurring a debt.
If you choose to downsize, you can benefit from the Federal Government's downsizing initiative. This means that if you're aged 65 or more, you can sell your principal residence (which needs to have been owned for at least 10 years) and use the proceeds to make a non-concessional (after-tax) contribution of up to $300,000 to your superannuation for an individual, or up to $600,000 for a couple. Known as Downsizer contributions, these do not count towards your superannuation contribution caps. To learn more, visit the ATO website.
- Limited availability of lower-priced accommodation can mean having to move to a different location to secure reasonable downsizing funds. This can mean leaving friends and family behind.
- Once legal and transaction costs, stamp duty and moving expenses are taken into account, your funds could be substantially eroded.
- Downsizing can have a potentially adverse impact on assets and income tests used to assess Age Pension eligibility.
We recommend seeking financial advice from a qualified professional before making the decision to downsize.
Over 55% of people plan to downsize from their family home.
You can customise the design, improve the accessibility of your home, and even add to your property's value. But renovations can be expensive and stressful.
To downsize or renovate? We look at the pros and cons.