Selling the family home – is it worth it?

5 min read

Retirement’s looming, the kids have left and you’re probably reveling in the fact that your water and electricity bills are no longer through the roof.

Does it stack up financially?

Selling the family home may now seem like a good option, especially given the equity you’ve built up over the years.

But before you make the decision, there are some emotional and financial implications to consider.

On paper at least, selling the family home may seem like a great way to free up extra cash. But you will need to pay for a new home and this brings a range of buying and selling costs which can eat into the sale proceeds of your current home.

You also need to consider the value of your home versus any outstanding mortgage owing, as this could have a significant impact on your financial position.

There are ongoing costs to consider too.  For example, while moving from a house into an apartment can mean a lower maintenance style of living, you’ll have an additional expense of strata levies. The more facilities an apartment complex offers, the higher the levies you’re likely to face.

Consider your emotional needs

There’s a lot of family history tied up in our homes, not to mention the local neighbourhoods and communities that they reside in. So, it’s important to think about whether this is something you’re comfortable in letting go.

Investing the proceeds

If you decide to sell your family home, there are many other income producing assets available that you may want to consider investing in.

For instance, there is now a tax effective way to invest the proceeds of your family home in super.[1]

If you’re aged 65 or more, you can now deposit up to $300,000 ($600,000 for a couple) of your family home’s proceeds into super. Note, however, you must have owned your home for at least 10 years.[2]

Unlike other superannuation contributions, there are no strings attached to this - such as having to comply with the work test or not exceeding the new $1.6 million individual total balance cap.[2]

Impact to your Age Pension entitlements

While investing your family home’s proceeds into super may help to reduce ongoing tax bills, it could also affect any social security benefits you receive.

Obtaining or retaining an age pension entitlement may prove challenging as it depends on the value of your assets and your income.[3]  So, it’s important to consider all your options.

Bottom line: Selling your family home has a lot going for it, but it’s not for everyone. The possible consequences of downsizing need to be considered.

[1] Industry SuperFunds: https://www.industrysuper.com/understand-super/super-changes/proposed-changes/
[2] ASIC Money Smart: https://www.moneysmart.gov.au/superannuation-and-retirement/income-sources-in-retirement/selling-the-family-home
[3] Australian Government department of human services: https://www.humanservices.gov.au/individuals/enablers/deeming

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The article was prepared by BT Financial Group, a division of Westpac Banking Corporation ABN 33 007 457 14, and is current as at 11 January 2019.

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