If you are 55 or older and sell a home you have owned for at least 10 years, you may be able to contribute up to ,000 from the sale proceeds into your superannuation. For a couple, that is up to ,000 combined — a significant boost to your retirement savings.
It’s one of the most useful super strategies available to older Australians, but it’s widely misunderstood. A lot of people assume you actually have to “downsize” to a smaller place. You don’t. The rules are more flexible than most people think.
How the Downsizer Contribution Works
The downsizer contribution allows eligible individuals to make a one-off contribution to super of up to ,000 from the proceeds of selling a qualifying property. This contribution:
- Does not count towards your concessional or non-concessional contribution caps
- Does not require you to meet the work test or work test exemption
- Is available even if your total super balance exceeds .9 million
- Must be made within 90 days of receiving the sale proceeds (or settlement, if later)
- Can only be used once per person (though each member of a couple can make their own contribution from the same sale)
This makes it especially valuable for people who would otherwise be locked out of making large super contributions due to the standard cap limits or the total super balance threshold.
Eligibility Requirements
To make a downsizer contribution, you must meet all of the following criteria:
- Age: You (or your spouse) must be 55 or older at the time of the contribution
- Ownership period: You (or your spouse) must have owned the property for at least 10 years prior to the sale
- Property type: The property must be in Australia and must have been your main residence (or your spouse’s main residence) at some point during the ownership period. It does not need to be your current home at the time of sale.
- CGT exemption: The property must qualify for a full or partial main residence CGT exemption. Investment properties that were never your home do not qualify.
- First time: You cannot have previously made a downsizer contribution from the sale of another property
You don’t need to buy a smaller place, or even buy at all. You could sell, rent, move in with family, or buy something more expensive. The “downsizer” label is misleading — it’s really just a “home sale super contribution.”
What Counts as the Main Residence?
The property must have been your main residence (or your spouse’s) at some point during the 10-year ownership period. It does not need to be your main residence at the time of sale. This means you could have moved out years ago, rented it out, and still qualify — as long as it was your home at some stage and you can claim a full or partial main residence CGT exemption.
Properties that have only ever been investment properties do not qualify, even if you have owned them for decades.
How It Interacts with the Age Pension
This is where it gets important. A downsizer contribution increases your superannuation balance, and once you reach Age Pension age (67), your super is counted as an assessable asset under the Age Pension means tests.
For some people, making a large downsizer contribution can reduce their Age Pension entitlement because it pushes their assessable assets above the threshold. In other cases — particularly where the family home sale proceeds would otherwise sit in a bank account (which is also assessable) — the impact may be neutral.
The key question is whether the long-term investment returns inside super outweigh any reduction in pension payments. In many cases they do, but this depends on your total financial position, your age, and how long you expect to be drawing on your retirement savings.
It’s the kind of analysis where getting advice can save you a lot more than it costs.
Timing and Deadlines
You must make the downsizer contribution within 90 days of receiving the sale proceeds. In practice, that usually means within 90 days of settlement. You also need to submit a Downsizer contribution into super form (available from the ATO) to your super fund before or at the time of making the contribution.
If you miss the 90-day window, the contribution cannot be accepted as a downsizer contribution. It would instead count against your standard contribution caps — and if you exceed those caps, you may face additional tax.
Planning ahead is essential. If you are thinking about selling your home, talk to a financial adviser before you list the property, not after settlement.
Can Both Members of a Couple Contribute?
Yes. Each member of a couple can contribute up to ,000 from the sale of the same property, for a combined maximum of ,000. Both must individually meet the eligibility requirements (age, ownership, main residence), but only one of you needs to be a legal owner of the property.
This means a spouse who is not on the title can still make a downsizer contribution, provided the other eligibility criteria are met. This is particularly useful for couples where one partner has a lower super balance.
Example: How It Works in Practice
David and Sue, both 66, sell their Springwood home of 22 years for ,000. They buy a smaller unit in Daisy Hill for ,000, leaving ,000 in sale proceeds (after costs).
- David contributes ,000 to his super as a downsizer contribution
- Sue contributes ,000 to her super as a downsizer contribution
- Neither contribution counts against their caps
- Both contributions are accepted even though Sue was not on the original title
- Their combined super balances increase by ,000, providing significantly more retirement income when they start drawing pensions at 67
Is the Downsizer Contribution Right for You?
The downsizer contribution is a powerful tool, but it is not automatically the right move for everyone. Before making a contribution, consider:
- How will it affect your Age Pension entitlement?
- Do you have other uses for the proceeds that may be more beneficial?
- Is your super fund the right place for this money given your investment timeframe?
- Have you considered the transfer balance cap if your super is already above .9 million?
At Great Advice, we regularly help clients in the Logan corridor navigate downsizer contributions as part of their broader retirement strategy. If you are thinking about selling your home and want to understand how the downsizer contribution fits into your financial plan, book a free initial consultation.
Call 07 3290 0393 or visit greatadvice.com.au to book your free consultation.
References
- Australian Taxation Office (ATO), Downsizer Super Contributions.
- Australian Taxation Office (ATO), Downsizer Contribution into Super Form.
- Australian Taxation Office (ATO), Key Superannuation Rates and Thresholds: Transfer Balance Cap.
- Services Australia, Assets Test for Age Pension, 2026.
- Services Australia, Income Test for Age Pension, 2026.
- MoneySmart (ASIC), Downsizer Contributions and Your Super.
- Australian Taxation Office (ATO), Main Residence CGT Exemption.
General Advice Warning: This article contains general information only and does not take into account your individual objectives, financial situation, or needs. The downsizer contribution rules are subject to change and may not be suitable for everyone. Before making any financial decisions, you should seek personal financial advice from a licensed adviser. Great Advice Financial Advisers is a Corporate Authorised Representative of Akumin Financial Planning Pty Ltd (AFSL 232706).
