Downsizing your home is one way to boost your super savings in a tax-efficient way. Eligible Australians can put up to $300,000 into their super from the proceeds of selling their family home, without the usual restrictions.

The downsizer contribution is tax-free (i.e. no tax is paid on the way into super). It also won’t count towards your annual contribution caps, as it can be made in addition to any concessional and non-concessional contributions.

And despite the name, there is no requirement to buy a new, smaller home with the money you make from the sale.

Who is eligible?

From 1 January 2023, those aged 55 years or older may be eligible. There is no work test or upper age limit to meet the eligibility criteria.

If you have a spouse aged 55 years or older, they can also make a downsizer contribution of up to $300,000 ($600,000 per couple) to their super from the same proceeds.

Downsizer contribution rules

• The home you sell must be in Australia (caravans, mobile homes and houseboats are excluded).

• You or your spouse need to have owned the house for at least 10 years.

• The home you sell 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.

Things to consider

Will selling your home impact your eligibility for the Age Pension? Your family home isn’t counted as part of the means test for the Age Pension. However, if it’s sold and the proceeds go towards a downsizer contribution, this will be included in the Age Pension eligibility tests. That means you may reduce or lose your entitlement to the Age Pension.

Downsizer contributions count towards your transfer balance cap if you use your super to open a pension account.

How do you make a downsizer contribution?

• You must submit a Downsizer contribution into super form to your super fund with or before your downsizer contribution is made.

• Contributions to your super account must be made within 90 days of receiving the proceeds of the sale.

• Find out more via the Australian Taxation Office.