Downsizer Contributions: Boost Your Super When You Sell Your Home

Sold the family home? The downsizer contribution lets you put up to $300,000 into super—regardless of your age, work status, or existing super balance. Here's how to use it.

What Is a Downsizer Contribution?

Downsizer contributions allow Australians aged 55+ to contribute up to $300,000 from the sale of their home directly into super. These contributions:

• Don't count toward your concessional or non-concessional caps
• Can be made regardless of your total super balance
• Don't require a work test
• Can be made by both members of a couple ($600,000 total)

Eligibility Requirements

To make a downsizer contribution, you must:

1. Be 55 or older at the time of contribution (reduced from 60 in 2022)
2. Sell an eligible dwelling in Australia
3. Have owned the home (or your spouse owned it) for at least 10 years
4. The home was your main residence at some point during ownership
5. Make the contribution within 90 days of receiving sale proceeds (extensions available)
6. Not have previously made a downsizer contribution from the sale of another home

The Age Pension Trade-off

Here's where it gets strategic. Your home is exempt from the Age Pension assets test. Super is not.

Moving $300,000 from your home into super means:

• Benefit: More income from super in retirement
• Cost: Potentially reduced Age Pension due to higher assessable assets

For some people, the extra super income outweighs any pension reduction. For others—especially those with modest super—keeping wealth in the home might preserve more pension entitlement.

The Transfer Balance Cap

Downsizer contributions can push your super above the $1.9 million transfer balance cap. If this happens, you can't move all of it into pension phase (where earnings are tax-free).

Amounts above the cap stay in accumulation phase, where earnings are taxed at 15%. Still better than outside super, but not as good as pension phase.

When Downsizer Contributions Make Sense

Good candidates:

• People with modest super who want to boost retirement income
• Those who've exceeded other contribution caps
• Couples who can each contribute $300,000
• People who would otherwise invest sale proceeds in taxable accounts

May want to reconsider:

• Those heavily reliant on the Age Pension (moving home equity to super reduces pension)
• People with health issues who may not benefit long from super's tax advantages
• Those who want maximum flexibility (super has access restrictions)

The Process

1. Sell your eligible home
2. Complete the "Downsizer contribution into superannuation form" from the ATO
3. Give the form to your super fund with (or before) your contribution
4. Make the contribution within 90 days of settlement

Your super fund needs to receive the form to treat the contribution as a downsizer contribution. Without it, regular contribution caps apply.

How Talk Through Wealth Helps

Model the impact of downsizer contributions on your retirement:

• Compare keeping home equity vs contributing to super
• See the Age Pension impact of higher super balance
• Project retirement income under different scenarios
• Factor in transfer balance cap implications
• Coordinate with other contribution strategies