Disincentives for downsizers on the hit list

Disincentives for downsizers on the hit list Stamp duty exemptions and quarantined family home profits are reportedly on the table as the Australian Government looks to remove barriers to downsizing for senior Australians.Federal Treasurer Scott Morrison is said to be considering a proposal that would see some proceeds from the sale of the family home exempted from the age pension assets test, provided they are directed into approved retirement products, such as life annuities and aged care bonds.The Property Council’s executive director of Retirement Living, Mary Wood, says allowing seniors to unlock the equity in their family home can help tackle the challenges of an ageing population.”Targeted reforms to the aged pension means test to remove the current disincentive to downsize is good public policy that will benefit seniors as well as making the pension system fairer and more sustainable,” she says.Wood cautions that the government must ensure the choice of moving to a retirement village is respected in the reforms being considered.”Older Australians need access to all retirement living options, and the penalty on downsizing should be removed for all pensioners, not just those who buy annuities.”Retirement villages are already home to almost 200,000 residents – more than the total number of senior Australians who live in residential aged care – and are becoming more and more popular.” The Property Council has previously proposed a highly-targeted adjustment to the age pension means test, which would exempt up to $200,000 of home sale proceeds when homeowners aged over 75 purchase a cheaper home.A one-off stamp duty exemption when pensioners purchase a smaller home is also reportedly under consideration, but would need the support of all state and territory governments.”Stamp duties are universally acknowledged as one of the worst, most growth-inhibiting taxes so it is great news to see they are also being targeted in this package,” Wood concludes.Read the Property Council’s Unlocking home equity proposal.