What are downsizer contributions?

Downsizer contributions allow older Australians to contribute additional money into super when they sell their primary residence when it has been owned for 10 years or more.  Downsizer contributions are a one-off way for older Australians to contribute additional funds to their superannuation account.

To make a downsizer contribution there are some rules you need to be aware of:

  • You must be aged 55 or over when you make the contribution.  There is no upper age limit.
  • The property must be your (or your spouse’s) primary residence and it has to have been owned for 10 years or more.
  • The property must be in Australia and excludes investment properties that you have not lived in, as well as caravans, mobile homes, houseboats and vacant land.
  • There is no work test requirement.
  • They do not form part of either the concessional or non-concessional contribution caps.
  • It will count towards your transfer balance cap. This cap applies when you move your super savings into retirement phase and will be considered for determining eligibility for the age pension.
  • It will not affect your total superannuation balance until it is re-calculated at the end of the financial year.
  • It may impact on your ability to receive the aged pension.

There is no requirement to buy a new home.  However, downsizer contributions are a once only concession.

How much can you contribute?

You can contribute up to $300,000 per individual.  This means a couple can potentially contribute up to $300,000 each.  However, the downsizer contribution cannot exceed the sale price of the home.

If your home was only owned by one spouse, the spouse that did not have an ownership interest may also make a downsizer contribution, or have one made on their behalf, provided they meet all of the other requirements.

How do you make a downsizer contribution?

You must make the contribution into your super account within 90 days of settling your property sale.

If you are eligible, you’ll need to complete a downsizer contribution form and provide this either before or together with your contribution cheque, to your complying superannuation fund so it can be correctly classified. The form is available from the ATO website.

For more information on the downsizer scheme, visit the ATO website.

You may wish to seek independent financial advice before deciding to make a downsizer contribution into your superannuation fund to ensure this decision is appropriate for your individual objectives, financial situation, and needs.

Issued by Diversa Trustees Limited (ABN 49 006 421 638), (AFSL No 235153).

This article is general advice only and does not take into consideration your personal objectives, financial situation or particular needs. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser.