Part 3 of our editorial series: "Your Pension, Your Future"
Selling the family home can be one of the most powerful financial moves you make in retirement. Thanks to Australia’s downsizer contribution rules, eligible over-55s can use the proceeds from their home sale to boost their super balance — and create more tax-effective retirement income.
In this article, we break down how it works, who benefits, and how to maximise your opportunity. Retirement Property Listings
What Is a Downsizer Contribution?
A downsizer contribution is a one-off, after-tax contribution to your superannuation made from the proceeds of selling your main residence. As of 1 January 2023, Australians aged 55 and older can contribute up to 300,000 dollars per person (600,000 dollars for a couple) into super, outside the usual contribution caps. Downsizer super contributions | Australian Taxation Office
Why Use It?
1. Boost Tax-Free Retirement Income
Funds transferred into a retirement phase account can earn investment income tax-free. The new 2 million dollar Transfer Balance Cap (effective from 1 July 2025) increases the potential to grow more of your savings in a low-tax environment.
2. Free Up Cash Without Sacrificing Super Flexibility
For many retirees, home equity is their biggest asset. This strategy unlocks it without being penalised by concessional or non-concessional caps.
3. Improve Pension Outcomes (In Some Cases)
While the Age Pension assets test does count downsizer contributions, strategic financial planning can help structure your income to maintain or delay pension eligibility.
Real-Life Scenario: Carol, The Caring Downsizer
Carol, 68, sold her family home for 1.2 million dollars and moved into a smaller retirement apartment closer to her daughter. With no mortgage, she placed 250,000 dollars of the proceeds into her super as a downsizer contribution.
This boosted her income stream, reduced taxable earnings, and gave her peace of mind for future aged care needs. Importantly, she did this without needing to meet work test requirements.
Key Rules to Know
- You must be 55 or older at the time of contribution.
- The home must have been owned for at least 10 years and been your principal residence.
- The contribution must be made within 90 days of settlement.
- You must notify your super fund using the ATO's Downsizer Contribution form.
Tips to Maximise the Benefit
- Coordinate with Your Financial Adviser: Consider your overall tax position and Age Pension implications.
- Time the Sale Wisely: Make use of the increased 2 million dollar Transfer Balance Cap from July 2025.
- Check Fund Acceptance: Not all funds accept downsizer contributions; confirm with your super fund first.
A guide to making downsizer contributions to super | Macquarie
Disclaimer: This article provides general information only and does not take into account your personal financial situation or needs. You should consider obtaining independent financial advice from a licensed professional before making any decisions based on this content.
