Downsizing contributions into superannuation

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From 1 July 2022 the eligible age is 60 years old or older. Prior to 30 June 2022 it was 65 years old or older.

Some of the eligibility criteria you must satisfy are:

  • The home must be in Australia, have been owned by you or your spouse for at least 10 years and the disposal 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.
  • If you’re a couple, you can contribute up to $600,000 — but $300,000 into each superannuation account
  • For the full eligibility criteria and other details find out more at Downsizer contributions for individuals.

The greatest advantage of the downsizer measure is the huge injection into your superannuation. There’s no work test, (upwards) age limit or condition to buy a new house. With the 90-day window to contribute, you can use that money however you like (including investing).

As an after-tax downsizer super contribution, there’s no tax paid on it. For individuals over 65, it’s returned tax-free when the funds are withdrawn in the future.

However, downsizer contributions will be taken into account when determining age pension eligibility. Because your main residence is exempt from the assets and income tests, it’s important to know you’ll be moving your money into the non-exempt category. An individual’s super balance is used to determine eligibility for residential aged care and home care services. While this might not be a need now, it’s worthwhile understanding for the future.

The ATO website is the best source for up-to-date information on the downsizer measure. To complete a contribution, a specific form is required.

Source: Downsizers Guide To Superannuation Contributions | Homesuite

Downsizing contributions into superannuation | Australian Taxation Office (ato.gov.au)