Downsizer Contributions: Up to $300,000 Into Super

01 What a downsizer contribution is

A downsizer contribution lets each member of a couple aged 55 or over contribute up to $300,000 from the proceeds of selling their main residence into super — $600,000 combined. The home must have been owned for at least 10 years, and the contribution must be made within 90 days of settlement. Crucially, it sits outside the normal concessional and non-concessional caps, so it's available even if you've used those up or your balance is too high to contribute normally.

On the defaults above, the worked example shows: Each eligible owner aged 55+ can contribute up to $300,000 from the proceeds — $600,000 for 2 — without using the contribution caps.

Source: ATO — Downsizer super contributions

02 You don't actually have to downsize

Despite the name, there is no requirement to buy a cheaper home, or any home at all. You can sell and rent, move in with family, or buy something more expensive; the contribution only has to come from the proceeds of selling an eligible main residence.

That flexibility is what makes it useful to people restructuring their living situation in later life rather than only those trading down. Selling a large family home to move into an apartment near adult children qualifies. So does selling up to travel, or to move into a retirement village, or to fund a move interstate.

It can only be used once in your lifetime, which turns it into a decision about which sale to use it on rather than whether to use it. Someone who expects to sell a house at 60 and again at 75 has to pick. Because the cap is a flat $300,000 per person regardless of the sale price, the sensible answer is usually the first sale that generates at least $300,000 of proceeds each — using it on a smaller sale wastes the difference permanently.

The name causes the single most common misunderstanding in this area: people assume they must buy something smaller and cheaper to qualify, and many rule themselves out on that basis. The rule contains no such requirement. What is required is the sale of an eligible main residence held for ten years — what you do next is irrelevant to eligibility, and buying a more expensive home still qualifies.

Source: ATO — Downsizer super contributions

03 The Age Pension trade-off

This is the part people miss, and it is the difference between the strategy being excellent and being a mistake. Your home is exempt from the Age Pension assets test. Super in your name is fully assessable.

Moving $300,000 out of an exempt asset and into an assessable one can therefore reduce or remove a part Age Pension through the assets taper, which cuts the payment by $3 per fortnight for every $1,000 of assessable assets above the threshold. On $300,000 that is up to $900 a fortnight, or roughly $23,400 a year of pension — considerably more than the tax advantage of holding the money in super is worth.

The result is a clean split by circumstance. For a self-funded retiree already above the assets cut-off, there is no pension to lose and the move is straightforwardly good: money leaves a non-earning asset and enters a concessionally taxed one. For someone on a part pension, the pension lost usually exceeds the tax saved, and the contribution can leave them materially worse off. For a full pensioner, it can end the pension entirely.

The decision therefore is not about super at all. It is about which side of the assets cut-off you are on, and it should be modelled with your actual numbers before settlement, not after.

Source: Services Australia — Assets test for Age Pension

04 Eligibility and the 90-day clock

The rules are specific, and missing one disqualifies the contribution. You must be 55 or over at the time you contribute; the home must have been owned by you or your spouse for at least 10 years and have qualified for at least a partial main-residence CGT exemption; and the contribution must be made within 90 days of receiving the sale proceeds (usually settlement). You complete a downsizer contribution form for your fund at or before the time you contribute. Only one home sale can ever be used, and the cap is $300,000 per person regardless of how the home was owned, capped at your share of the actual proceeds. Get the form and the 90-day timing right — there's no discretion to extend it casually.

Source: ATO — Downsizer eligibility

05 Who it suits

Downsizer contributions suit retirees who have sold a long-held home and want more of the proceeds inside the low-tax super system — especially those already above the Age Pension assets cut-off, who lose no pension by making the move.

They suit part-pensioners much less. The assets-test impact frequently outweighs the tax benefit, and the contribution is irreversible: once the money is in super it is assessable, and taking it back out does not restore the home exemption because you no longer own the home. Model the pension effect before you contribute, not after.

Three practical points for anyone proceeding. The 90-day clock runs from settlement, not from listing or exchange, and it is not extended for a slow fund — start the paperwork with your super fund before settlement rather than after. The downsizer form must reach the fund at or before the time you contribute, and a contribution made without it is treated as an ordinary non-concessional contribution, which may breach your cap. And if the home was owned by one spouse only, both partners can still contribute their $300,000 each, provided the other requirements are met — the ownership test looks at the couple, not the individual.

Source: ATO — Downsizer super contributions