Downsizer Contribution to Super — What You Need to Know

What is the Downsizer Contribution?

The downsizer contribution allows Australians aged 55 and over to contribute up to $300,000 per person ($600,000 per couple) from the proceeds of selling their home into their superannuation fund. Unlike standard contributions these are not subject to contribution caps or the work test.

Eligibility Requirements

You must be aged 55 or over at the time of the contribution. The home must have been owned for at least 10 years. The contribution must be made within 90 days of settlement. The home must be in Australia and must not be a caravan houseboat or other mobile home.

Strategic Considerations

The downsizer contribution can be a valuable retirement planning strategy particularly for homeowners with significant home equity and limited super balances. It allows you to boost your super without being limited by the concessional or non-concessional contribution caps.

Interaction with the Age Pension

The downsizer contribution may affect Age Pension entitlements. While the contribution itself is not counted under the Age Pension assets test for Centrelink purposes the resulting super balance may increase assessable assets. Professional advice is recommended before proceeding.

How Downsizer Contributions Work

The downsizer contribution scheme allows Australians aged 55 and over to contribute up to $300,000 per person from the proceeds of selling their home into their superannuation. This amount does not count toward the non-concessional contributions cap of $120,000 per year or the $360,000 bring-forward cap, making it an exceptionally generous contribution opportunity.

To be eligible, you must be 55 or older at the time of the contribution (there is no maximum age limit), the property must have been your main residence in Australia and owned by you for at least 10 years, and the contribution must be made within 90 days of settlement (or such longer period as the ATO allows in special circumstances). Both members of a couple can claim the full $300,000 each from the sale of the same home, potentially adding $600,000 to their combined super balances.

Strategic Considerations for Downsizers

The downsizer contribution is particularly valuable for older Australians who have significant home equity but limited super balances. By moving equity from the family home (which is exempt from Age Pension means testing) into super (which is means tested), you need to carefully consider the impact on Age Pension entitlements. The contribution may reduce or eliminate your Age Pension eligibility depending on your overall asset position.

For many retirees, the trade-off is worthwhile: the super balance can be invested to generate retirement income, and once in pension phase, the earnings are tax-free. If the home was worth $800,000 and you downsize to a $500,000 property, the $300,000 contributed to super could generate approximately $15,000-$18,000 per year in tax-effective retirement income (at a 5-6% drawdown rate), compared to the non-income producing family home.

What Your SOA Should Cover

If downsizer contributions are part of your retirement strategy, your Statement of Advice should address several key areas: the eligibility criteria and how you meet them, the proposed contribution amount and timing relative to settlement, the impact on your Age Pension entitlements (with modelling), and how the contributed amount will be invested within super.

Your adviser should also explain the interaction with other super rules, including the work test if you are aged 67-74, the total super balance cap ($1.9 million for 2025-26, indexed), and the relationship with any existing contribution caps you may have already used. A comprehensive SOA will show modelling of your retirement income both with and without the downsizer contribution to demonstrate the benefit.

Frequently Asked Questions

Can I make a downsizer contribution if I already have more than $1.9 million in super?
Yes. Downsizer contributions are not subject to the total super balance cap. You can contribute up to $300,000 from the sale of your home even if your super balance already exceeds $1.9 million, but be aware that any amount over the transfer balance cap ($1.9 million) must remain in accumulation phase.

Does the 10-year ownership rule apply to a deceased spouse's home?
The 10-year ownership test applies to the person making the contribution. If you inherit your spouse's home and sell it shortly after, you may not meet the 10-year test unless you owned the property jointly for 10 years or more. Seek professional advice if your situation involves inherited property.

What happens if I contribute more than 90 days after settlement?
The ATO has discretion to accept late contributions in limited circumstances, such as delays beyond your control. You should apply to the ATO for an extension and explain the circumstances. Generally, you should aim to contribute within the 90-day window.

Can I use downsizer contributions to fund a pension?
Yes. Once the contribution is in super, it counts toward your transfer balance cap. You can then transfer up to $1.9 million into a tax-free retirement pension account. The contribution is treated like any other super balance for pension purposes once it is in the fund.