Retired homeowners have been given a $300,000 incentive to sell under a federal budget plan to encourage older property owners to downsize.

From 1 July 2018, homeowners aged 65 and older who’re selling a home they’ve lived in for 10 years or more will be able to make a non-concessional contribution of up to $300,000 into their superannuation from the proceeds of the sale.

Both members of a couple will be allowed to take advantage of this measure for the same home.  

The aim of this incentive is to reduce the barrier to downsizing for baby boomers, many of whom are living in homes with extra bedrooms and considerable maintenance costs. If baby boomers sell their homes, it would free up housing stock for younger families looking to upgrade into more suitable real estate.

Typically, older homeowners have been reluctant to sell their homes for both sentimental and financial reasons. Selling property can be costly and the funds left over after buying a smaller home could then be considered in the means test.

The new incentive is in addition to other concessions that are already permitted, and will be exempt from the age test, work test, and the $1.6m balance test.