As you head into retirement, you may be looking at ways to maximise your Super.

One way is by making a downsizer contribution following the sale of your main place of residence.

From 1 January 2023, if you’re aged 55 years or older you may be eligible to make a downsizer contribution of up to $300,000 (or $600,000 for a couple) to your superannuation fund from the proceeds of the sale of your home where specific requirements are met.

This can greatly benefit those who find they want to downsize their home to a smaller residence (or if entering aged care) and enhance their super at the same time.

Let’s answer some of the most common questions when it comes to downsizing contributions.

Downsizer Contributions FAQ

  1. Can you claim multiple sales of residence?

    No. You can only make downsizing contributions for the sale or disposal of one home, which includes the sale of a part interest in a home.

  2. What is the eligible age?

    The eligible age has dropped from 65 years old back in 2018 to 55 years old as of the 1st January 2023.

  3. What are the eligibility criteria?

    There are eligibility requirements to make a downsizer contribution which include:

    – The home must be in Australia and have been owned by you or your spouse for at least 10 years.

    – The home must be exempt or partially exempt from capital gains tax (CGT).

    – 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.

    – Prior to (or at the same time) as making your contribution you must provide your fund with the ‘Downsizer contributions into super form’.

  4. Is there a maximum I can contribute to my Super?

    Yes. The maximum you can contribute is $300,000 for a single or $600,000 for a couple.

  5. Are there any upper age limits?

    No. There is no upper age limit when making a downsizer contribution and there is no requirement to purchase a new principal residence.

    As long as you meet the eligibility criteria they are eligible to make a downsizer contribution.

  6. Can the sale of my home affect my pension benefits?

    Possibly. When selling your residence to make a downsized contribution, check the impact on your pension benefits with your Accountant.

  7. Can a downsized contribution affect my aged care payments?

    Possibly. If you are planning to sell your main residence and are entering, or about to enter aged care, it is important to consider the impact on your ongoing cost of care.

    Having more money in super, rather than a main residence may increase your ongoing cost of aged care due to changes in your ‘means tested amount’ – which determines whether they pay an accommodation payment or an accommodation contribution.

  8. Is there a deadline as to when I make the downsized contribution?

    Yes. The downsizer contribution must still be made within 90 days of change of ownership.

If you are thinking about selling your home as you head into retirement, it is worth speaking with your Financial Advisor about the best course of action and any effects it will have on any pension benefits.

If you’d like to have a chat with one of our Financial Advisors, book an appointment today.