Updated on 19 June 2026
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.
What is a Downsizer Contribution?
If you are aged 55 or over and meet certain eligibility requirements, you may be able to make a one-off downsizer contribution of up to $300,000 to your superannuation from the proceeds of selling an eligible home. Couples may be able to contribute up to $300,000 each, allowing up to $600,000 to be contributed to super from the sale of the same property.
Importantly, downsizer contributions do not count towards your concessional or non-concessional contribution caps. They can also be made even if your Total Super Balance (TSB) exceeds the threshold that would normally prevent you from making non-concessional contributions.
For many Australians approaching or in retirement, downsizer contributions can provide a valuable opportunity to boost retirement savings in a tax-effective environment.
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:
- You must be 55 years old or older at the time you make the Downsizer Contribution.
- 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.
- Your home was owned by either yourself or your spouse for at least 10 years or more prior to the sale.
- You make your Downsizer Contribution within 90 days of receiving the proceeds of sale.
- 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.
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.
A Note on Downsizer Contributions and Div 296 Tax
One of the key advantages of the downsizer contribution is that it can still be made even if your TSB exceeds the thresholds that would normally restrict other contribution types.
However, individuals with super balances approaching or already exceeds $3 million should carefully consider whether a downsizer contribution is appropriate. While the contribution remains available regardless of your existing super balance, adding more money to super may increase the proportion of your balance that is subject to Division 296 tax, which applies to a portion of earnings attributable to super balances above $3 million from 1 July 2026.
If you have a larger super balance, it is important to speak with a financial adviser before making a downsizer contribution. While the strategy can still be highly effective, the benefits should be considered in the context of your overall retirement strategy, tax position and the potential impact of Div 296.
If you would like to learn more about the new rules and how they may impact your retirement strategy, read our latest blog: Div 296 Tax Is Now Confirmed and Commencing from 1 July 2026 – Start Preparing Now!
Yield is Here to Help
If you’re thinking about selling your home or want to understand whether a downsizer contribution makes sense for you, speak with the team at Yield. Our retirement specialists can help you assess the potential benefits and ensure the strategy aligns with your overall retirement plan.
Book a complimentary initial consultation today and discover what’s possible.
