Moving into a smaller property is a step many people take later in life. Not only can it make day-to-day living more affordable, but it can also release any equity they've already built up in their home.
However, the Property Council of Australia has suggested that people need more help downsizing, which can be achieved through policy action and giving older Australians the encouragement they require.
Asset rich, income poor
Figures from the Australian Bureau of Statistics (ABS) show that many older people in this country have strong assets, but the same cannot be said for their retirement income.
Three-quarters of older people in low-income households owned their property outright, while a further 8 per cent had decided not to buy a house and were renting.
Mary Wood, the Property Council's executive director of retirement, said a typical person over the age of 65 has around $600,000 in property assets. However, they will be living their daily life on a fixed income.
"It makes little sense, both from an economic and a health and wellbeing perspective, to trap older people in large and often unsuitable family homes, with little money available to spend," Ms Wood commented.
Coming up with a solution
The Property Council is calling for changes to be made to the existing means-tested approach to equity release. It argues that some proceeds from selling the family home should be exempt from the full-rate of tax, especially among people over the age of 75.
This would give older Australians an incentive to put their larger property up for sale, while encouraging them to go in search of more appropriate real estate for their needs. Not only this, bigger homes will be made more readily available to families who would benefit from greater amounts of space.
Thinking of selling
The following advice is of a general nature only and intended as a broad guide. The advice should not be regarded as legal, financial or real estate advice. You should make your own inquiries and obtain independent professional advice tailored to your specific circumstances before making any legal, financial or real estate decisions.