If you are aged 55 years or older, the downsizer contribution rules enable you to contribute up to $300,000 from the proceeds of the sale of your home to your superannuation fund (eligibility criteria applies).

In 2023-24, over 57% of people making a ‘downsizer’ contribution to super were women. And, the average value of the contribution was marginally higher at $262,000 versus $259,000 contributed by men.

The most likely age someone makes a downsizer contribution is between 65 and 69. From age 65, a downsizer contribution can be withdrawn from super if your circumstances change, even if you are still working. Those aged 55 to 64 generally won’t have access to these funds until they are at least 60 and retired.

Downsizer contributions are excluded from the existing upper age test, work test, and the total super balance rules (but the amount that can be moved to a retirement pension is 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 or your spouse meet the other criteria, both of you 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).

To be eligible to make a downsizer contribution 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 make a downsizer contribution if you have access to other funds.

EXAMPLE 1: Contribution of maximum amount
A couple, George and Jane, sell their home for $800,000. Each spouse can contribute up to $300,000.

EXAMPLE 2: Contributions can’t exceed the total sale price
A couple, Bruce and Betty, sell their home for $400,000. The maximum contribution both of them can make is $400,000 in total. This means they can choose to contribute half ($200,000) each, or split it – for example, $300,000 for Betty and $100,000 for Bruce.

EXAMPLE 3: When a property is owned by one spouse
A couple, John and Fatima, sell their home for $600,000. Only John is on the title. Both John and Fatima meet all the other requirements, therefore both of them can both make a downsizer contribution of up to $300,000 each.

How to make a contribution

• Contact your super fund(s) to check that they accept downsizer contributions.
• You’ll need to submit a Downsizer contribution into super form (NAT 75073) to your fund(s) with or before your contribution is made. If you don’t, your fund may not be able to accept your contribution as a downsizer contribution.
• If you make multiple contributions to one or more super funds, you must provide a Downsizer contribution into super form for each contribution. The total of your contributions cannot exceed $300,000.
• Contributions must be made to your super fund within 90 days of receiving the proceeds of sale. However in some circumstances you may be able to request an extension of time.

If you make an invalid contribution

If the Australian Tax Office (ATO) becomes aware that your contribution doesn’t meet the eligibility requirements, your fund will need to assess whether it could have been made as a personal contribution under their acceptance rules.

If your contribution is accepted as a personal contribution, the amount will count towards your non-concessional contributions cap.

If your contribution can’t be accepted, the contribution amount will be returned to you by your super fund.

Penalties may apply for making a false and misleading statement if you incorrectly declare you’re eligible to make a downsizer contribution.

Reach out to Indigo Financial on (08) 8212 8585 if you need assistance understanding the facts and implications of downsizer contributions.