Many older Australians who have jumped on the downsizing train have said that it’s a liberating experience. Today we’re going to discuss the benefits of downsizing in Rozelle and the government incentives available to entice you to hop on the bandwagon.
What is downsizing?
Downsizing usually applies to older Australians or empty nesters moving before or during their retirement. There are two main types of downsizing.
The first is financial downsizing, which is when you downsize to a house lower in value than your previous home. It’s not necessarily smaller in size. The second is physical downsizing, which refers to moving to a smaller property and usually contains an element of financial downsizing (unless you trade up to harbour views or waterfront).
Benefits of downsizing in Rozelle
There are several benefits of downsizing to a Rozelle property:
Increased cash flow
Whether you decide to financially or physically downsize, you can expect to decrease your costs. This refers to mortgage repayments as well as insurance and utility expenses. Downsizing can also allow you to find a smaller home with better benefits, like a better view or location.
Decreased clutter
Many people will say the biggest benefit of downsizing is getting rid of unnecessary clutter. This is the best time to be ruthless with excess furniture and knick-knacks and prioritise your most sentimental possessions. Learn what to do with all your stuff.
More spare time
Think about all the free time you’ll have when you don’t have to spend your days maintaining the interior and exterior of a larger property. Say goodbye to household chores and lawn maintenance and hello to more time with loved ones.
More flexibility
When you move from a larger home in Rozelle to a smaller home or an apartment, you will have more freedom regarding spontaneous weekend getaways or longer holidays. Primarily, especially if you move to a unit, you won’t have to worry about getting someone to take care of your home. They call it the “lock-and-leave lifestyle.”
3 government incentives for downsizers
Do you need more convincing to give downsizing a go? Check out these government incentives.
1. Downsizing contributions to superannuation
If you are 55 years or older, you can contribute up to $300,000 from your home sale proceeds into your superannuation fund.
Click here for eligibility criteria. But foremostly, you must be selling an Australian home that you or your spouse owned for at least 10 years. The disposal must also be exempt or partially exempt from capital gains tax.
The main benefit of this incentive is that super income and lump sum withdrawals are tax-free for most Australians 60 years and older.
2. Incentivising Pensioners to Downsize Act
The Social Services and Other Legislation Amendment (Incentivising Pensioners to Downsize) Act 2022 was passed in Parliament in November. This legislation aims to incentivise pensioners to downsize their larger family homes to free up housing stock for younger families.
The Act means that the principal home sale proceeds a person intends to use to buy a new home are exempt from the asset test for 24 months. Deemed income on these exempt proceeds will also be calculated at a lower rate (currently 0.25 per cent) until June 2024.
This exemption gives downsizers more time to relocate to a new home without worrying about the proceeds having an impact on their payment rate (if they have to stay in temporary accommodation, for example). As deeming rules can be confusing, we recommend you seek professional advice from a financial adviser before acting.
3. Stamp duty exemption
Check your State Government website for confirmation, but many states and territories are offering stamp duty exemptions or concessions to pensioners downsizing their homes.
How many Australians are downsizing?
In the last few years, many Australians have downsized and moved to regional areas where they paid less for what might have been a larger home or one the same size as what they had. Rozelle residents can take advantage of lower-priced units in Rozelle or nearby Lilyfield: the median house price in Rozelle is $2,175,000 while the median unit price in Lilyfield is $900,000.
Important: We are not financial advisers so you should seek advice from a professional financial adviser before acting on any of the information contained in this article.
Can we help with your Inner West home?
Whether you’re ready to sell or need help to rent your investment property, we have the experience and local knowledge to make your property journey easier.
Looking for help selling your home or renting your investment property? Our team at Belle Property Balmain support homeowners across Balmain, Balmain East, Birchgrove, Rozelle and Lilyfield. Feel free to get in touch for a no-obligation discussion or property appraisal.
