If you’re planning to sell your home later in life, you may have a valuable opportunity to supercharge your retirement savings — even if you’re already retired or have a high super balance.
Since 1 January 2023, Australians aged 55 or older can contribute up to $300,000 each (per person) into superannuation from the proceeds of selling their primary residence, without impacting their usual contribution caps. Known as a downsizer contribution, this strategy is designed to help older Australians boost their super balances as they transition to retirement — but it comes with specific rules, and it may not be suitable for everyone.
Here’s what you need to know to decide if this opportunity is right for you.
Key Eligibility Rules
To qualify for the downsizer contribution:
- You must be 55 years or older at the time of contributing.
- The home must have been owned for 10 years or more, by you or your spouse.
- The home must have been your main residence at some point.
- The contribution must be made within 90 days of settlement.
- You must submit the ATO “Downsizer contribution into super” form before or when the contribution is made.
- You can’t claim a tax deduction for the contribution.
- You must not have made a downsizer contribution previously.
Importantly, the $300,000 limit applies per person — so a couple could contribute up to $600,000 combined, provided the total sale proceeds allow for it.
Reference: ATO – Downsizer contributions
Pros of Making a Downsizer Contribution
- Super is a Tax-Effective Investment Structure
Downsizer contributions go into your tax-free component of super. Earnings on these contributions in retirement phase are generally tax-free, and the balance may not be taxed upon death when passed to non-dependent beneficiaries.
- You Can Contribute Regardless of Super Balance or Work Status
Even if your super balance is over $2 million, or you’ve already retired, you can still make a downsizer contribution — unlike many other types of contributions that are limited by these factors.
- Helps Reduce Future Death Tax
Because downsizer contributions increase your tax-free component, they can help reduce or eliminate the 15% tax that may otherwise apply if your super is passed to non-dependents (like adult children) after your death.
- Property Doesn’t Need to Be Fully CGT-Exempt
Downsizer contributions are allowed even if:
- The home was partly rented
- The land is over 2 hectares
- The home was rebuilt or built on previously purchased land
- You only owned a share of the property (e.g. as a tenant in common)
- Flexibility to Use Assets
You can contribute assets you already own (e.g. shares, other investments) into your super to fund the downsizer contribution, provided they match the cash value of your sale — particularly useful if the cash from your home sale is needed to purchase a new residence.
Considerations and Drawbacks
No Immediate Tax Deduction
Downsizer contributions are non-concessional and not deductible, so if you have a high taxable income, you may want to explore making a concessional (deductible) contribution instead — especially if you have carry-forward concessional cap room.
You Can Only Use It Once
The downsizer opportunity is a one-time-only benefit, so if you might benefit more from using your standard non-concessional cap or future concessional caps, timing is important.
Access to Super May Be Limited
If you’re under age 65 and still working, you may not yet meet a condition of release. This means the money will be locked in super until you retire or satisfy another release condition — which could be an issue if you need those funds to buy your next home.
Centrelink Impacts
While your principal home is exempt from Centrelink’s assets test, once the sale proceeds are moved into super (and you’re over pension age), the balance may be deemed and assessed under both the income and assets test — potentially reducing your Age Pension or eligibility for the Commonwealth Seniors Health Card.
What Will You Live In Next?
Selling your home to make a contribution sounds appealing, but be sure to consider the cost of your next residence. Will there be enough money left to fund your downsizer strategy?
Summary of Downsizer Contribution Rules
| Requirement | Details |
| Minimum Age | 55 years (from 1 Jan 2023) |
| Contribution Limit | $300,000 per person |
| Ownership Period | 10+ years (you/spouse), includes land |
| Residency Requirement | Must have lived in the property at some point |
| Timing of Contribution | Within 90 days of property settlement |
| Form Required | ATO Downsizer contribution into super form |
| Can you deduct the contribution? | No |
| Can it be used more than once? | No |
Conclusion: Is the Downsizer Strategy Right for You?
The downsizer contribution scheme is one of the most generous superannuation concessions available to older Australians — offering a rare opportunity to boost your super balance, even after retirement or when your super is already above standard contribution limits.
But just because you can make a downsizer contribution doesn’t mean you should. Consider your:
- Access to super
- Taxable income
- Centrelink entitlements
- Next housing needs
- Estate planning goals
Because superannuation rules can be complex — and the decision can have lasting tax, income and social security implications — it’s wise to speak with your financial adviser or tax professional before making a move.
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