Downsizer Contributions & Your Superannuation

What is the Downsizer Contribution to Superannuation?

Since the 1st of July 2018, Australians aged 65 or older have had the ability to make non-concessional contributions of up to $300,000 (downsizer contribution) into their superannuation, providing that the money has been derived from the sale proceeds of the former or current principal place of residence. This contribution can be made regardless if you don’t meet the standard eligibility criteria to contribute to super.

As of January 2023, the eligibility age for the Downsizer Contribution was reduced from 60 to 55. 

How Do Downsizer Contributions Work?

Those eligible are able to contribute up to $300,000 of the proceeds from the sale of a house they have lived in at some point as a downsizer contribution to super for either their spouse and/or themselves. This means between yourself and your partner, you can contribute $300,000 from the sale of your property each.

The contribution amount cannot be more than the total proceeds of the sale of your home. However, in order for this to be eligible as a downsizer contribution to superannuation, the recipient needs to meet certain eligibility requirements.

Eligibility Requirements

You will only be eligible to make a downsizer contribution to superannuation if you meet all of the requirements listed below:

• You are at least 55 years of age or older at the time you decide to make a downsizer contribution to superannuation. 
• The amount you are contributing is only from the proceeds of selling your home where the contract of sale for the property was exchanged on or after 1 July 2018. Sale contracts dated before the 1st of July 2018 will not be eligible.
• The property that’s sold needs to have been your or your spouse’s main place of residence at some point in time.
• The property needs to have been owned for at least 10 years. 
• The property is in Australia and is not a houseboat, caravan, or another form of ‘mobile home’.
• The proceeds (capital loss or gain) from the sale of the home are either partially exempt or exempt from capital gains tax under the main residence exemption. Or, the proceeds would be entitled to this type of exemption if the home was a capital gains tax, rather than a pre-capital gains tax asset (acquired before the 20th of September 1985).
• You are required to treat any and all contributions specifically as a downsizer contribution, and let your superannuation provider know about downsizing to superannuation in the approved form, either before or at the time you make your downsizer contribution to super.
• You must ensure you make the downsizer contribution within a 90 day period of receiving the proceeds of the sale, which typically is the date of settlement.
• You haven’t made a superannuation downsizer contribution previously from the sale of a different home.

There is some flexibility over the 10-year ownership condition of the requirements and it covers situations where:

• One member of the couple has not been shown on the title of the property sold. 
• The property was used for both main places of residence and business use.
• You have been in possession of a property for less than ten years as a result of a former residence compulsorily acquired. 
• If the property in question was owned by one member of a couple for at least a ten-year period. It doesn’t matter about the length of time the couple is married.
• In the circumstance that the spouse who owned the property for longer than ten years dies, then the surviving spouse can make the downsizer contribution, even if you have not been married for the required ten-year period.
• The ten-year requirement can also be cleared by those whose home has been acquired compulsorily and then the new home is sold within the ten-year period. 

If you satisfy all the necessary points above, then you will most likely be eligible to make a super downsizer contribution.

Benefits of Making a Downsizer Contribution to Superannuation

1. Downsizer contributions to super help your retirement fund.
2. No work test or age limits apply to downsizer contributions.
3. Annual contribution caps don’t apply to downsizer contributions.
4. There are no requirements to purchase a new home.
5. Both members of a couple have the ability to contribute.

Yield Financial Planning is Here to Help

Prior to making a downsizer contribution to super, it is important to consider how this will impact your retirement plan. Contact the expert financial advisors at Yield for further clarification. 

If you have any questions or queries, we’re here to help the process run as smoothly as possible for you. 

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.