Downsizer super contributions

Check if and how you can contribute money from the sale of your home into your super fund via a downsizing contribution.

If you are 55 or older, you may be able to contribute up to $300,000 from the proceeds of the sale (or part sale) of your home into your superannuation fund.

A downsizer contribution is a non-concessional contribution, but it doesn’t count towards the contribution cap. It will not affect your total superannuation balance until it is re-calculated at the end of the financial year.

However, downsizer contributions count towards your transfer balance cap. This cap applies when you move your super savings into retirement phase, and is taken into account in determining eligibility for the age pension.

You should consider seeking independent financial advice in relation to the age pension asset tests.

Visit the ATO Publication Ordering Service to download their Contributing the proceeds of downsizing to super factsheet. This publication summarises everything to consider if you're planning to contribute money from the sale of your home into your super fund.

Eligibility requirements

You must meet these eligibility conditions:

You have reached the eligible age (and there is no maximum age limit) at the time you make a downsizer contribution 

from 1 January 2023, 55 years or older

from 1 July 2022, 60 years or older

from 1 July 2018, 65 years or older.

Your home was owned by you or your spouse for 10 years or more before the sale – the ownership period is generally calculated from the date of settlement of purchase to the date of settlement of sale.

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, or the home would be entitled to the exemption if it was a CGT rather than a pre-CGT asset (acquired before 20 September 1985).

You make your downsizer contribution within 90 days of receiving the proceeds of sale (usually at the date of settlement).

You have not previously made a downsizer contribution to your super from the sale of another home or from the part sale of your home.

You provide your super fund with the Downsizer contribution into super form (NAT 75073) either before or at the time of making your downsizer contribution.

Note: If your home was only owned by one spouse and was sold, 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.

How much you can contribute

You can make a downsizer contribution up to a maximum of $300,000 (each spouse), but the contribution amount can't be greater than the total proceeds from the sale of your home.

Example: contribution of maximum amount

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

Example: contributions can't exceed the total sale price

A couple, Bruce and Betty, sell their home for $400,000. The maximum contribution both of them can make is $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: when a property is owned by one spouse

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

Example: sale of home and 'in specie' contribution to a SMSF

Alisha has a portfolio of listed shares worth $150,000. She sells her home for $500,000. As Alisha meets all the other requirements, she can make a downsizer contribution of up to a maximum of $300,000 using a combination of her shares and cash.

A person can make a downsizer contribution in the form of an 'in-specie' contribution (normally this would be a self-managed super fund), provided the value of the asset is equal to all or part of the proceeds from the disposal of the qualifying dwelling.

Instead of using the cash proceeds from the sale to make their contribution, they choose to transfer a portfolio of listed shares into their SMSF which they already own individually.

Example: selling part of the equity in a property

Robert and Wendy decide to sell part of their home’s equity, allowing them to continue living in the home.

Their home is currently worth $500,000, and they sell 20% of the equity in the home for $100,000. They can make a downsizer contribution of up to $100,000 between them. If they decide to sell more of the ownership interest in the property in the future, they will not be eligible to make another downsizer contribution as they can only access the scheme in relation to one disposal of an ownership interest in this or any other home.

Visit the Australian Taxation Office website for full details

Source - ATO.GOV.AU Last updated 26 March 2024