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Book a FREE consultation
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Get started with a free strategy consultation and receive a copy of the Good Fortune Guide – written by James McFall, Managing Director Yield™ FP and 2020 National Finalist Certified Financial Planner of the Year to help educate you on your Financial Plan.

What Is The Downsizer Contribution?


As an Australian, the largest investment you’ll likely make is the purchase of a property to live in. So when you are transitioning to retirement, considering the Downsizer Contribution is an important aspect of your financial plan.

It can be a great investment for the lifestyle and security it can provide, but over time it is not unusual for retirees or even those approaching retirement to have changing needs from their home.

For one thing, if you have children and they are no longer living with you, you may have a home that is bigger than you need now, making the maintenance and housekeeping associated with living in your large property potentially a burden. This can lead to higher levels of stress and even overall lower quality of life.

The house may have served you perfectly well with a family, but now as empty nesters, you might be looking for different infrastructure and conveniences. Another reason you may be considering downsizing could be to release some equity, that you then are able to invest in your retirement income needs.

If you resonate with this situation there’s an option available – the Downsizer Contribution to Superannuation.

downsizer contribution

What is a Downsizer Contribution?

From the 1st of July 2021, if you are above the age of 60 and meet certain eligibility requirements, you will be able to make a once off contribution to your superannuation of up to $300,000 from the proceeds of selling your primary residence. This can be made regardless if you don’t meet the standard eligibility criteria to contribute to super.

The beauty of this contribution is that it is not considered a non-concessional contribution and therefore does not count towards your contribution caps. This contribution can still be made regardless if your total superannuation balance (TSB) is above $1,700,000.

Who Is Eligible?

As stated previously, to be eligible to make a Downsizer Contribution you must meet a certain criteria, this criteria is as follows:

  1. You must be 60 years old or older at the time you make the Downsizer Contribution.
  2. The amount you contribute is from the proceeds of selling your primary residence where the contract of sale exchanged on or after 1st July 2018.
  3. Your home was owned by either yourself or your spouse for at least 10 years or more prior to the sale.
  4. You make your Downsizer Contribution within 90 days of receiving the proceeds of sale.
  5. You have not previously made a Downsizer Contribution to your super from the sale of another home.

Assuming you’ve met all of the above requirements, you are able to make a once off Downsizer Contribution up to $300,000 to Super. Also, if the property is jointly owned, which is typically the case when it comes to couples, you are able to contribute $300,000 each. This means the max contribution under Downsizer Contribution rules is $600,000.

downsizing the family home

Who Would Use The Downsizer Contribution?

If you intend to downsize during retirement, you are best poised to take advantage of the Downsizer Contribution rules. 

Doing this will enable you to transition funds out of your primary residence, which is considered an illiquid asset, and invest surplus proceeds within the tax effective environment of Superannuation. These funds can then be drawn on to meet the needs of your retirement lifestyle.

We at Yield find that many retirees are asset rich but cash poor. This is primarily due to how much of their investable wealth is tied up in their primary residence. Knowing this, we often implement a Downsizer Contribution strategy to enable clients to lead the lifestyle they want.

Yield Financial Planning Is Here To Help

If anything we’ve discussed here interests you and want to know more about how implementing a Downsizer Contribution strategy can assist in meeting your retirement goals, please contact the specialist team at Yield.

Important Note
Any information provided here is general advice only and does not consider your objectives, financial situation or needs. This information should not be taken as comprehensive and does not constitute legal or financial advice. You should seek legal, financial or other professional advice before relying on any content. Yield Financial Planning is not responsible to you or anyone else for any loss suffered in connection with the use of this information. Information is only current at the date initially published.

About Yield™ - Financial Planner Melbourne

Who we serve – We help time poor professionals and business owners who intuitively know they should be doing more to improve their financial position and are seeking an expert to guide them on financial planning strategies. Our clients want personalised financial planning advice and to feel empowered and confident that they can achieve a secure transition to retirement.

What we do – We gain a deep understanding of your current financial position and preferences, what you value and want to achieve. We then help you develop a highly personalised financial plan, to show you how to make your money work harder for you. Ongoing we regularly monitor and measure progress against your plan projections, to show you how you’re tracking and help you manage change to your advantage.

How we do it – We apply our proven expertise in investment markets (Shares & Property), Tax and Debt structuring, Retirement Planning, Risk management and Estate planning, to help you reorganise the way you use your money to achieve your desired outcomes.

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