What You Need to Know Before Selling the Family Home
If you’re thinking about selling the family home and contributing the proceeds to super, downsizer contributions might be a smart strategy — especially if you’re aged 55 or over and no longer https://www.ato.gov.au/individuals-and-families/super-for-individuals-and-families/super/growing-and-keeping-track-of-your-super/how-to-save-more-in-your-super/downsizer-super-contributionsorking full time.
Downsizer contributions are a great way to boost your super without triggering the usual contribution caps — and unlike other contributions, there’s no age limit or work test. Here’s what you need to know.
Quick Snapshot of the Rules
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Age: 55+ at time of contribution (no upper age limit)
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Amount: Up to $300,000 per person ($600,000 per couple)
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Timing: Within 90 days of settlement
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Property: Must be your main residence for 10+ years (not a caravan or houseboat)
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Use of funds: Doesn’t have to come from sale proceeds, and you don’t need to buy another home
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One-time use only: You can’t use this rule more than once
You’ll also need to complete the ATO Downsizer Contribution Form when you contribute to super.
Common Questions about the Downsizer Contribution
“Should I use the downsizer cap or my regular NCC cap?”
That depends. If you plan to sell another home later, it may be smarter to preserve the downsizer option. But if you’ve got enough funds from the sale, you might even use both caps to get more into super.
“Can I use other money, not the actual sale proceeds?”
Yes — the contribution doesn’t have to come directly from the sale proceeds. If you’ve used that money to buy a new home, you can still use other funds to make the downsizer contribution (so long as you meet the criteria).
“What if the property is given away or transferred under a granny flat arrangement?”
If no actual sale proceeds are received, unfortunately you can’t make a downsizer contribution. The contribution must be based on the money received from the sale.
“Does it matter if only part of the land qualifies for the CGT exemption?”
No — you can contribute up to the full amount of the gross sale proceeds, even if only part of the property qualifies for the CGT main residence exemption.
“Can I contribute more than my share if I co-own with someone who isn’t my spouse?”
No — if you own the home as tenants in common with a non-spouse, you can only contribute based on your share of the sale proceeds.
What About Centrelink?
If you’re receiving the Age Pension, the impact of a downsizer contribution can vary:
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If you intend to buy or build another home, the proceeds may be exempt under the assets test for up to 24 months
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If you don’t intend to buy again, the funds will be assessed as assets and deemed as income
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If the funds go into super and you’re under Age Pension age, they’re generally exempt from Centrelink means testing
💡 Tip: You can reduce the Centrelink impact by using some of the contribution to purchase a lifetime annuity, which receives concessional treatment under both the income and assets test.
Example: Amy & Justan
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Retirees aged 67
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Sold their home and contributed $200,000 each into super using the downsizer rules
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Their Age Pension dropped significantly
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By investing $135,000 each into a lifetime annuity, they boosted their Age Pension by over $8,400 a year
Final Thoughts
Downsizer contributions offer a fantastic opportunity to top up super in retirement, but it’s crucial to understand the fine print — and how it interacts with tax, Centrelink, and estate planning.
📞 Chat to us at Trusted Aged Care Services if you’re planning to downsize — we’ll help you structure the move to maximise your super, minimise the impact on your pension, and make sure the next step feels just right.