If you\u2019re thinking about selling the family home and contributing the proceeds to super, downsizer contributions<\/strong> might be a smart strategy \u2014 especially if you\u2019re 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.<\/p>\n Downsizer contributions are a great way to boost your super without triggering the usual contribution caps<\/strong> \u2014 and unlike other contributions, there\u2019s no age limit or work test<\/strong>. Here\u2019s what you need to know.<\/p>\n Age<\/strong>: 55+ at time of contribution (no upper age limit)<\/p>\n<\/li>\n Amount<\/strong>: Up to $300,000 per person ($600,000 per couple)<\/p>\n<\/li>\n Timing<\/strong>: Within 90 days of settlement<\/p>\n<\/li>\n Property<\/strong>: Must be your main residence for 10+ years (not a caravan or houseboat)<\/p>\n<\/li>\n Use of funds<\/strong>: Doesn\u2019t have to come from sale proceeds, and you don\u2019t need to buy another home<\/p>\n<\/li>\n One-time use only<\/strong>: You can\u2019t use this rule more than once<\/p>\n<\/li>\n<\/ul>\n You\u2019ll also need to complete the ATO Downsizer Contribution Form<\/strong><\/a> when you contribute to super.<\/p>\n \u201cShould I use the downsizer cap or my regular NCC cap?\u201d<\/strong> \u201cCan I use other money, not the actual sale proceeds?\u201d<\/strong> \u201cWhat if the property is given away or transferred under a granny flat arrangement?\u201d<\/strong> \u201cDoes it matter if only part of the land qualifies for the CGT exemption?\u201d<\/strong> \u201cCan I contribute more than my share if I co-own with someone who isn\u2019t my spouse?\u201d<\/strong> If you\u2019re receiving the Age Pension<\/strong>, the impact of a downsizer contribution can vary:<\/p>\n If you intend to buy or build another home<\/strong>, the proceeds may be exempt under the assets test for up to 24 months<\/strong><\/p>\n<\/li>\n If you don\u2019t intend to buy again, the funds will be assessed as assets<\/strong> and deemed as income<\/strong><\/p>\n<\/li>\n If the funds go into super and you\u2019re under Age Pension age<\/strong>, they\u2019re generally exempt from Centrelink means testing<\/p>\n<\/li>\n<\/ul>\n \ud83d\udca1 Tip:<\/strong> You can reduce the Centrelink impact by using some of the contribution to purchase a lifetime annuity<\/strong><\/a>, which receives concessional treatment under both the income and assets test.<\/p>\n Retirees aged 67<\/p>\n<\/li>\n Sold their home and contributed $200,000 each into super using the downsizer rules<\/p>\n<\/li>\n Their Age Pension dropped significantly<\/p>\n<\/li>\n By investing $135,000 each into a lifetime annuity, they boosted their Age Pension by over $8,400 a year<\/strong><\/p>\n<\/li>\n<\/ul>\nQuick Snapshot of the Rules<\/h3>\n
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Common Questions about the Downsizer Contribution<\/h3>\n
That depends. If you plan to sell another home later, it may be smarter to preserve the downsizer option. But if you\u2019ve got enough funds from the sale, you might even use both<\/strong> caps to get more into super.<\/p>\n
Yes \u2014 the contribution doesn\u2019t have to come directly from the sale proceeds. If you\u2019ve 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).<\/p>\n
If no actual sale proceeds are received, unfortunately you can\u2019t make a downsizer contribution. The contribution must be based on the money received<\/strong> from the sale.<\/p>\n
No \u2014 you can contribute up to the full amount of the gross sale proceeds<\/strong>, even if only part of the property qualifies for the CGT main residence exemption.<\/p>\n
No \u2014 if you own the home as tenants in common<\/strong> with a non-spouse, you can only contribute based on your share of the sale proceeds<\/strong>.<\/p>\nWhat About Centrelink?<\/h3>\n
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Example: Amy & Justan<\/h3>\n
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Final Thoughts<\/h3>\n