Downsizing Contributions into Superannuation

As of 1 July 2018 there is now a new type of superannuation contribution. The ‘downsizer’ superannuation contribution is for members aged 65 years and over who wish to contribute up to $300,000 from the sale proceeds of their family home into superannuation.

About downsizer contributions

The downsizer contribution is not a 'non-concessional contribution' and will not count towards the contributions caps. The downsizer contribution can still be made even if individuals have a total super balance greater than $1.6 million.

The downsizer contribution will not affect the individual’s 'total super balance' until their total super balance is re-calculated to include all contributions made, including downsizer contributions, on 30 June each year.

The downsizer contribution will also count towards the 'transfer balance cap', currently set at $1.6 million. This cap applies when people move their super savings into retirement phase.

Downsizing contributions can only be made from the sale of one home. It can’t be accessed again for the sale of a second home.

Downsizer contributions are not tax deductible and will be taken into account for determining eligibility for the age pension.

If you sell your home, are eligible and choose to make a downsizer contribution, there is no requirement for you to purchase another home. Likewise the purchase of a larger or more expensive property does not affect eligibility.

Eligibility for the downsizer measure

You will be eligible to make a downsizer contribution to super if you satisfy all of the following conditions:

  • you are 65 years old or older at the time you make a downsizer contribution (there is no maximum age limit);
  • the amount you are contributing is from the proceeds of selling your home where the contract of sale exchanged on or after 1 July 2018;
  • your home was owned by you or your spouse for 10 years or more prior to the sale. The ownership period is generally calculated from the date of settlement of purchase to the date of settlement of sale. The home can be owned jointly, or as tenants in common. The rules also allows for the death of one spouse during the 10-year ownership period;.
  • your home is in Australia and is not a caravan, houseboat or other mobile home;
  • the proceeds (capital gain or loss) from the sale of the home are either exempt or partially exempt from capital gains tax (CGT) under the main residence exemption. The main residence exemption will also apply to adjacent land (such as a garden), up to 2 hectares;
  • you have provided your super fund with the ‘Downsizer contribution into super’ form either before or at the time of making your downsizer contribution;
  • you make your downsizer contribution within 90 days of receiving the proceeds of sale, which is usually at the date of settlement; and
  • you have not previously made a downsizer contribution to your super from the sale of another home.

Note If the home sold was only owned by one spouse, the spouse that did not have an ownership interest may also make a downsizer contribution, or have one made on their behalf, provided they meet all of the other requirements.  

Downsizer contribution amounts

If eligible, you can make a downsizer contribution up to a maximum of $300,000 (each). The contribution amount can't be greater than the total proceeds of the sale of your home.

Example 1

A couple, George and Jane, sell their home for $800,000. Each spouse can make a contribution of up to $300,000.

Example 2

A couple, Bruce and Betty, sell their home for $400,000. The maximum contribution both can make cannot exceed $400,000 in total. This means they can choose to contribute half ($200,000) each, or split it, for example, $300,000 for Betty and $100,000 for Bruce.

Example 3

A couple, John and Emma, sell their home for $600,000. Only John is on the title. Both John and Emma meet all the other requirements, therefore both John and Fatima can made a downsizer contribution of up to $300,000 each.

Timing of contributions

Any downsizer contribution must be made within 90 days after the change of ownership. Change of ownership usually occurs at settlement date. The Commissioner can allow a longer period if necessary.

How to make a downsizer contribution

A member who is an eligible contributor must make the choice that the contribution is a downsizer contribution by completing the Downsizer contribution into super’ form the issued by the ATO. This form must be given to the superannuation fund before or at the time the downsizer contribution is made.

If you make multiple downsizer contributions or downsizer contributions to different super funds, you must provide the form for each contribution.

Contact your super fund to check that they accept downsizer contributions. If you don't currently have an open account with a super fund, you will need to open a new super account to make your downsizer contribution.


The full contents of this article is only available to our members. Click here to become a member.

Already a member?

Please enter your username and password below to gain access.

Member's Login
Username  
Password  
  retrieve your password