Supercharge Your Super by Subdividing

April 11, 2018

With some recent changes to superannuation contributions about to come into effect as of 1 July 2018, there is now a tax effective and clever way to unlock the equity in the family home. By downsizing you can top up your super fund by up to $300,000 for singles and $600,000 for couples in one hit.

If you meet the following criteria, this change could be just the tax effective super boost you’ve been looking for;

  • 65 years of age or older
  • Have been living in your family home for 10 years or more

Rather than move out of the family home and relocate to downsize, an option for those with larger, subdividable blocks is to subdivide the land, sell off the old home at the front and build a new home on the back – tax free.

​This is exactly what Kaye and David did with their Bayswater home and here’s how they did it.

Like many others, Kaye and David realised far too late in life that the super funds they’d accumulated over the years simply weren’t going to be enough to sustain the lifestyle they’d envisaged for themselves. They set out to explore all the available options.

After some extensive research and further financial advice from their Accountant and Financial Planner, they decided to explore the option of subdividing to help unlock the equity they had tied up in the family home. Rather than remain in their existing home, they decided they would subdivide, sell off the front home and build a new home on the back of the block with the proceeds from the sale of the old house.

This scenario ticked all the boxes for Kaye and David and set them up with a brand-new home, zero mortgage and $207,000 of surplus tax-free cash to tip into their super fund.

  • They get a brand-new home with less maintenance and a smaller more manageable garden
  • They can live in the same, familiar neighbourhood surrounded by family and friends
  • They maintain their independence and improve their financial security

Once all the paperwork was finalised, Kaye and David had time (and some extra spending money) to take a well-earned overseas holiday while all the subdivision work got underway. When they returned, they had the benefit of being able to live in their old home while the new one is being built. Stress free, tax effective and with peace of mind.

Although this strategy may not suit everyone, it’s certainly worth a conversation to see if it can work for you. There are other considerations around timing, potential impact on social security entitlements and other financial planning implications, so seeking professional financial advice is highly recommended.

The whole process from start to finish, including the subdivision and new build, was managed and taken care of by the team at Unlock Your Block.

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