Downsizing can be in the form of physically downsizing the size of the primary residence. This involves moving into a home that is smaller in size than the one you currently live in.
Typical catalysts for this to occur are when the children leave home and less space is needed.
Financial downsizing, on the other hand, is when you sell the primary home to buy a cheaper one. The cheaper home may be larger, so in this circumstance, size is irrelevant.
The word downsizing can be used interchangeably with the word "rightsizing".
What are you aiming to do - physically or financially downsize?
How we can help you maximise the benefits of downsizing
Before making the decision to downsize, it is important to be confident your decision today will be the right one to support your next steps and life goals.
We will help gain clarity about:
implications of selling and buying the properties
the potential impact on your age pension payments
whether you can use the downsized scheme, and
whether the funds from downsizing to a cheaper home could be better served in a different investment
An increasingly popular downsizing option is entering into a Granny Flat Arrangement. Living in a multi-generational household can bring an immense amount of satisfaction and benefits to everyone involved and in some cases, avoids the requirement to use third party services.
What is a ‘granny flat arrangement’?
“Commonly, a ‘granny flat arrangement’ is a situation where an older person lives with (or in separate accommodation on the same land as) a family member and does so with payment of monies or a transfer of assets in return for the right to live in accommodation, usually for the rest of their life”.
Also referred to as ‘granny flat right’, this arrangement can be structured in a number of different ways. The fundamental concept is some property is transferred, or some monies are paid, in return for the right to reside for the balance of their life.
Until legislation passed in June 2021 many families were reluctant to document the changing of money as it likely meant a possible unwanted immediate capital gains tax event for the recipient of the gift.
This left the older person in a vulnerable position, should the arrangement not work out.
To ensure your plan to engage in a Granny Flat Right protects all stakeholders involved we will give you the security the right decision has been made by reviewing the impact to your:
Centrelink (specifically, the impact on age pension and home care packages); and