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Downsizer super contributions

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What is a downsizer contribution?

If you’re 55 or over and thinking about selling your home, you might be eligible to make a downsizer contribution to your super, turning some of your asset into cash as you near retirement.

In order to be eligible for a downsizer contribution, you need to be age 55 or over and you must have owned the home for a minimum of 10 years. You could be eligible to contribute up to $300,000 as a single or $600,000 as a couple to your super. You’ll generally need to do this within 90 days of receiving the sale proceeds, plus a few other eligibility rules to meet.

The good news is, this contribution doesn’t count under regular contribution caps, which limits how much you can add to your super. You also don't need to be working when you make a downsizer contribution, because there's no work test. There are a few rules though, so you’ll need to make sure you’re eligible.

 

How a downsizer contribution can help your retirement

A downsizer contribution can help you boost your super later in life. Here’s how it can help:

  • It doesn’t count toward your annual contribution caps. So it’s a good way to add a large lump sum to your super.
  • There’s no upper age limit, so even if you’ve already retired, you can still make a downsizer contribution.
  • A downsizer contribution is made after-tax, so you don’t pay the usual 15% contributions tax when you make the transfer into your super.
  • If you later move the money into a Retirement Income account it can help provide income in retirement.

 

How much difference can it make?

If you’re over 55 and want to make a downsizer contribution, here’s how much extra income you could get each year in retirement:

 

ContributionExtra yearly income
$100,000$4,000
$300,000$11,100
$600,000$24,100
  • This example is for illustrative purposes only. It relies on various assumptions. If actual circumstances differ from these assumptions, actual results will be different.
  • Contributions of $100,000 and $300,000 are based on a single female, making a downsizer contribution at age 55 and retire at age 67.
  • Contributions of $600,000 are based on a couple (male and female), making a downsizer contribution at age 55 and retire at age 67. Each member will contribute $300,000 into their super.
  • Extra incomes are rounded to the nearest $100 and are stated in today’s dollars deflated using Average Weekly Ordinary Time Earnings (AWOTE) of 3.5% p.a. in accumulation phase and CPI of 2.50% p.a. in pension phase.
  • The downsizer contribution is made at age 55 and invested in the Aware Super MySuper Life Cycle option, assumed to be CPI + 4% until age 55, reducing from CPI + 4% to CPI + 2.75% between the ages 55-65 (inclusive) and CPI + 2.75% from age 65 onwards.
  • Starting from age 67 at retirement, the single and couple started an income stream which is invested in the Conservative Balanced (pension) option. The assumed return is CPI + 3.25% p.a net of all taxes, investment, and admin fees.
  • Starting from age 67 at retirement, the single and couple will both attempt to maximise their income until age 95.
  • The female member has a starting salary of $80,000 and a starting balance of $126,000.
  • The male member has a starting salary of $102,000 and starting balance of $164,000.
  • Age pension and asset and income test thresholds are valid as at 1st July 2024.

Who is eligible for a downsizer contribution?

It’s a good idea to double check that you meet all requirements before you contribute:

  • You must be aged 55 or older at the time of the contribution
  • You (or your spouse) must have owned the home for at least 10 years
  • The home must be in Australia and not a mobile home, like a caravan or houseboat
  • The sale must qualify for a full or partial main residence CGT exemption (which generally requires you or your spouse to have lived in the property)
  • You must generally make the contribution within 90 days of receiving the sale proceeds
  • You must not have previously made a downsizer contribution. You can only make this contribution to your super once
  • You must provide your fund with the downsizer contribution form before or at the time of making your contribution

Benefits of the downsizer contribution

A downsizer contribution can help you boost your super later in life.

  • It doesn’t count toward your annual contribution caps so it’s one of the few ways to add a large lump sum to your super.
  • There’s no upper age limit so even people who have already retired can benefit.
  • It can become your tax-free income once you start accessing your super through a Retirement Income account.

How does a downsizer contribution work as a couple?

You and your partner can contribute up to $300,000 each from the same home sale. So a couple can contribute up to $600,000.

Importantly, only one partner needs to be on the property title. As long as one partner meets the ownership and residency requirements, both partners may still be able to make their own downsizer contribution, even if the other partner isn't listed as an owner.

Each partner makes their own separate contribution into their own super account, and each contribution is assessed against that person's own $300,000 limit. It isn't a shared or combined cap. Both contributions must still be made within 90 days of receiving the sale proceeds, and each partner needs to submit their own downsizer contribution form.

Your partner simply needs to:

  • Complete the ATO downsizer contribution form in their own name.
  • Send the completed form to Aware Super before or at the time they make their contribution. They can upload the form online using Aware Super's secure upload, or send the paper form to Aware Super with their cheque.
  • Make their contribution into their existing Aware Super account within 90 days of receiving the money from the sale.

Your partner can still make their downsizer contribution. They'll just need to join Aware Super first. Here's how:

  • Join Aware Super to open a new super account in their own name.
  • Complete the downsizer contribution form, using their new Aware Super account details.
  • Send the completed form to Aware Super before or at the time they make their contribution. They can upload the form online using Aware Super's secure upload, or send the paper form to Aware Super with their cheque.
  • Make their contribution within 90 days of receiving the sale proceeds.
  • It's a good idea for your partner to start this process early if they're not yet a member. This will ensure their account is set up in time to meet the 90-day contribution deadline.

How to make a downsizer contribution

Here’s what you need to do.

It’s a good idea to double check that you meet all requirements before you contribute. For the 2026–27 financial year, you’ll need to meet the following rules and eligibility requirements:

  • You (or your partner) must have owned the home for at least 10 years.
  • The home must be in Australia and not a mobile home, like a caravan or houseboat.
  • You or your spouse generally need to have lived in the property as your home, and qualify for a full or partial main residence capital gains tax exemption. You must generally make the contribution within 90 days of receiving the money from the sale.
  • You must not have previously made a downsizer contribution. You can only make this contribution once.
  • You must provide your fund with the downsizer contribution form before or at the time of making your contribution.

Decide how much of the money you want to contribute (up to $300,000 if you’re single, or $600,000 as a couple). The amount you contribute can’t exceed the money you receive from selling your home. You need to be 55 or older when you make your downsizer contribution.

Fill out the downsizer contribution form.

Important: You’ll need to provide your filled-in downsizer contribution form before or at the same time as you make your contribution. If we receive the form after your contribution, the money may count towards your usual contribution caps instead.

You can upload the form online using Aware Super's secure upload, or send the paper form to us with your cheque.

Make your downsizer contribution to your super account within 90 days of receiving the money from selling your home, which is usually the settlement date. If something outside your control means you need more time, you can ask the ATO for an extension to the 90-day deadline. Get in touch with them as soon as you can to talk through your options.

Each person makes their contribution (up to $300,000 each) into their own super account. If you’re already eligible for a retirement account, you can then move it across. See which type of retirement account might work best for you.

There are two ways to transfer your downsizer contribution:

BPAY

  • If you’re an Aware Super member, log in to Member Online.
  • Select the Contributions tab and use the specific downsizer BPAY biller code and reference details displayed for members aged over 55.
  • Check your bank’s transfer limit and adjust your daily transfer limit. If needed, you can make multiple payments. Make sure you upload your downsizer contribution form before or the same day you make your downsizer contribution.

Cheque

  • Make sure your cheque is accompanied by your completed ATO downsizer form. You can also upload it before making your contribution.
  • Mail the cheque and form to:
    Aware Super
    GPO Box 89
    Melbourne VIC 3001
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Does a downsizer contribution affect getting the Age Pension?

A downsizer contribution can affect your Age Pension eligibility because the value of your home isn’t included in the assets test. However when you sell your home and transfer money into your super, it is included in the test. An exemption to the rule is if you then buy a new home, its value is generally not counted in these tests.

 

Get advice

If you think making a downsizer contribution could affect your eligibility, we can help you get expert advice and guidance.

Visit the Age Pension Hub
Our Age Pension Hub also has information regarding the Centrelink Age Pension. It can also help you with eligibility requirements, how to apply and what to do if you get stuck.
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Case studies

A couple downsizing together

Abdul (62) and Holly (60) have lived in their family home for nearly 20 years. They’ve decided it's time for a change into something smaller and easier to manage. They place their home on the market and sell it for $850,000. After settlement, they decide to contribute $300,000 each (a total of $600,000) from the sale proceeds into their super as a downsizer contribution.

These examples are for illustrative purposes only. It relies on various assumptions. If actual circumstances differ from these assumptions, actual results will be different.

Paying off mortgage and boosting super

Margaret is 67. She's a retired teacher. She sells her home for $1.2 million and buys a townhouse for $800,000. With the sale proceeds, she pays off her remaining $150,000 mortgage and covers $50,000 in real estate agent fees and moving costs. This leaves her with $200,000, which she decides to contribute to her super as a downsizer contribution.

These examples are for illustrative purposes only. It relies on various assumptions. If actual circumstances differ from these assumptions, actual results will be different.

A former home that’s now a rental property

David is 66. He lived in his home for 15 years before moving in with his partner. Rather than selling straight away, he kept the property and rented it out as an investment for the next 4 years. When David finally sold the property for $900,000, he assumed he wouldn't be eligible to make a downsizer contribution, since it hadn't been his main residence at the time of sale. However, after speaking with an adviser, David learned that because the property still qualified for a partial main residence capital gains tax exemption — and he'd owned it for more than 10 years in total,

These examples are for illustrative purposes only. It relies on various assumptions. If actual circumstances differ from these assumptions, actual results will be different.

Upsizing to a larger home

Priya is 61, after her children moved out, she decided she wanted more space to host her growing family for holidays and sells her home of 22 years for $700,000. She decides to buy a larger home and also make a $150,000 downsizer contribution from the sale proceeds. She uses other savings to help fund the purchase of her new home.

Despite the name, you don't have to buy a smaller home to make a downsizer contribution. What matters is whether you meet the eligibility requirements.

These examples are for illustrative purposes only. It relies on various assumptions. If actual circumstances differ from these assumptions, actual results will be different. 

Things to consider

Downsizer contributions can be valuable, but there are a few important things to keep in mind:

  • You can’t claim a tax deduction for downsizer contributions.
  • A downsizer contribution is a once-only opportunity and can only be used for the sale of one home.
  • It may affect your eligibility for the Age Pension.
  • It will affect your total super balance if you’re close to the transfer balance cap.
  • You must provide your fund with the downsizer form from the ATO before or when you make your downsizer contribution.
  • You must generally make your contribution within 90 days of receiving the money from the sale proceeds (you may be able to apply to the ATO for an extension in some circumstances)

FAQs about downsizer contributions

Yes, in many cases. It doesn't need to be the home you're living in right now. What matters is that you or your spouse lived in it as your main residence at some point during the 10-year period you owned it, before it became a rental.

If the property still qualifies for a full or partial main residence exemption from capital gains tax, a former home that now has tenants won't stop you from making a downsizer contribution. If you've never lived in the property yourself, you won't meet the eligibility rules. 

You can only make one downsizer contribution from a single home sale. After you sell, you generally have 90 days to make your contribution – up to $300,000 each, or $600,000 as a couple. 

You can split this into multiple payments if you need to, as long as they're all from that same sale. You may need to do this if your bank has a daily transfer limit and won't let you send the full amount in one go.

Remember to complete a new contribution form for each payment.

No. Downsizer contributions aren’t taxed when they go into your super and it doesn’t count towards your usual concessional or non-concessional contribution caps. For this reason, when you make a downsizer contribution, you can’t claim a tax deduction on the payment.

You must be 55 or older at the time you make a downsizer contribution. There’s no maximum age limit, so you can contribute at any age as long as you meet the other eligibility rules.

Yes. A downsizer contribution generally forms part of the tax-free component of your super because it’s made from money you’ve already paid tax on.

Yes. You can still make a downsizer contribution if you're retired, as long as you meet the eligibility rules.

It’s worth noting that initially, the downsizer contribution can't go straight into your Retirement Income account. It needs to go into a Future Saver account first. From there, you can move some or all of it into your Retirement Income account. If you do, it counts towards your transfer balance cap, so it's worth checking how much you have left before you hit your cap. 

Yes. Since it's made from after-tax money and you can't claim a tax deduction for it, a downsizer contribution forms part of the tax-free component of your super.

Yes. You or your spouse must have owned the property for at least 10 years before the sale and you must have lived in it at some point. You don’t need to have lived there for the entire 10 years, but the home must qualify for the main residence exemption under capital gains tax rules.

Yes. A downsizer contribution can affect your Age Pension. Your home is generally not counted under the Age Pension assets test while it's your principal home. After you sell it, however, the sale proceeds may be assessed depending on what you do with the money. Putting some of the proceeds into super may therefore affect your Age Pension entitlement. It’s best to talk to a financial adviser before making a contribution.

As long as one of you meets the ownership and residency rules, each partner may be able to contribute up to $300,000 each.

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[AD1] Advice provided by Aware Financial Services Australia Limited (ABN 86 003 742 756, AFSL 238430), wholly owned by Aware Super. 

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