Since 1 July 2018, eligible Australians over 65 who sell their homes can make a one-off contribution of the sales proceeds into super. This is known as a ‘downsizer’ contribution and the amount cannot exceed $300,000.
Eligibility requirements
In addition to being aged over 65, the other downsizer contribution eligibility requirements are:
- You (and/or your spouse) must have owned the home you sold for at least 10 years.
- The home you sold cannot be a mobile home, caravan, or houseboat.
- The home you sold must have been your main residence and the sales proceeds must have been exempt (or at least partially exempt) from capital gains tax (CGT), or bought prior to CGT being introduced in 1985.
- You must provide your super fund with the appropriate documentation.
- You must make the contribution within 90 days of selling the property (unless you apply to the Australian Taxation Office for an extension due to extenuating circumstances).
Downsizer contribution FAQs
Below are the answers to the most frequently asked downsizer contribution questions.
Can my spouse/partner and I each put up to $300,000 into super as a downsizer contribution?
Yes you can. However, you can’t contribute more than the combined proceeds realised from the sale.
Can I decide on the downsizer contribution split amounts between myself and my spouse/partner?
Yes you can and the amounts can differ. The only requirement is that each contribution cannot exceed $300,000.
Can I make a downsizer contribution to my partner/spouse’s super account even if he/she didn’t co-own the home that was sold?
Yes.
Is a downsizer contribution tax-deductible?
No.
Could a downsizer contribution affect my eligibility for the age pension?
Potentially. The funds contributed to super will be assessed under the aged pension eligibility tests.
Can I buy another home after I make a downsizer contribution?
Yes, but you don’t have to. The choice is yours. If you do and you subsequently sell that home, you won’t be able to make another downsizer contribution.
Does the downsizer contribution count towards my non-concessional contribution cap?
No it’s not included in your non-concessional contributions cap.
Can I make a downsizer contribution if my total super balance is more than $1.6 million?
Yes.
Does the downsizer immediately affect my total super balance?
Not immediately, it will when your total super balance is calculated on June 30 of the financial year in which the contribution is made.
Does the downsizer contribution count towards my transfer balance cap?
Yes. However, the transfer balance cap only applies when you begin to draw a pension from your retirement savings.
How we can help
Book in a consultation if you would like to discuss whether making a downsizer contribution would be an effective strategy to assist you in achieving your financial objective. Our experienced team of financial planning and self-managed super fund (SMSF) specialists will be able to give you the right advice on downsizer contributions and any other queries you may have about your super.
