Downsize your home and Upsize your Super fund balance

Downsize your home & Upsize your Super

The closer you get to retirement age, the more your thoughts may be to learning about more ways to get more money into your superannuation fund. While you might consider downsizing your home, why not consider upsizing your super balance at the same time?

Getting more money into your super when you sell the family home is just one of the strategies to consider when thinking about how to increase the balance of your super fund.

Read in this article

Updated eligibility rules of the Super Downsizer Scheme

This year's cap on regular contributions of money going into your superannuation fund is set at $27,500

But new rules starting 1 January 2023 for the Government's Downsizer Scheme have lowered the minimum eligibility age to allow people aged 55 and over to make additional Downsizer Contributions into their super fund, when they sell their family home. (Originally the minimum age was 65, but this has progressively been lowered to age 55).

  • This means eligible Australians selling their family home are able to make a one-off contribution of up to $300,000 per person into their super fund.

What is the maximum amount I can contribute to super?

The current cap on the amount of standard contribution an individual can make into their super fund is up to $27,500 each year.

These are contributions you have not paid any personal income tax on. They are called 'concessional contributions' because the concessional rate of tax paid on super is 15%.

  • Downsizer contributions are excluded from the existing age test, work test, and the transfer balance threshold (but are limited by your transfer balance cap).
  • For couples, both members of a couple can take advantage of the concession for the same home. That is, if you and your spouse meet the other criteria, both people can contribute up to $300,000 ($600,000 per couple). This is the case even if one of you did not have an ownership interest in the property that was sold (assuming they meet the other criteria).
  • The proceeds of the sale of the family home contributed to superannuation under this contribution option count towards the Age Pension assets test and because a downsizer contribution can only be made once in a lifetime, it is important to ensure this contribution strategy is the right option for you.

The eligibility criteria:

  1. You are 55 years or older (from 1 January 2023) at the time of making the contribution.
  2. The home was owned by you or your spouse for 10 years or more prior to the sale.
  3. The home is in Australia and is not a caravan, houseboat, or mobile home.
  4. You have not previously made a downsizer contribution to super from the sale of another home or from the part sale of your home.
  5. The proceeds (capital gain or loss) from the sale of the home are either exempt or partially exempt from capital gains tax (CGT) under the main residence exemption or would be entitled to such an exemption if the home was a post-CGT asset rather than a pre-CGT asset (acquired before 20 September 1985).

The practical issues:

  1. The downsizer contribution is made within 90 days of receiving the proceeds of a sale, which is usually at the date of settlement.
  2. You must provide your super fund with the prescribed form Downsizer Contribution to Super form (NAT 75073) either before or at the time of making the downsizer contribution.

What's in a name?

So the question we get asked a lot is, ‘Do I have to buy another smaller home?

No. The name of the scheme is misleading. To access this contribution option you do not have to buy another home once you have sold your existing home, and you are not required to buy a smaller home – you could buy a larger and more expensive one - and enjoy your retirement.


author pic drew browneDrew Browne is a specialty Financial Risk Advisor working with Small Business Owners & their Families, Dual Income Professional Couples, and diverse families. He's an award-winning writer, speaker, financial adviser and business strategy mentor. His business Sapience Financial Group is committed to using business solutions for good in the community. In 2015 he was certified as a B Corp., and in 2017 was recognised in the inaugural Australian National Businesses of Tomorrow Awards. Today he advises Small Business Owners and their families, on how to protect themselves, from their businesses.  He writes for successful Small Business Owners and Industry publications. You can read his Modern Small Business Leadership Blog here. You can connect with him on LinkedIn Any information provided is general advice only and we have not considered your personal circumstances. Before making any decision on the basis of this advice you should consider if the advice is appropriate for you based on your particular circumstance.

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