For a great many of the owners we help sell, the home being sold has been in the family for decades and the sale is part of a move into a smaller, simpler property. If that's you, there's a superannuation rule worth understanding before you sell — the downsizer contribution — because it can turn part of your sale proceeds into a substantial, tax-effective boost to your retirement savings.
What the downsizer contribution is
If you are 55 or older, you may be able to contribute up to $300,000 from the proceeds of selling your home into your super fund as a 'downsizer contribution'. Each member of a couple can do it, so a couple could potentially contribute up to $600,000 between them — and importantly, it can be done regardless of your existing super balance and without counting toward the usual contribution caps.
The main eligibility rules
The headline conditions are straightforward: you (or your spouse) must have owned the home for at least ten years before selling; the property must be in Australia and qualify at least partly for the main-residence capital gains tax exemption; you must be 55 or older when you make the contribution; and you must make it within 90 days of receiving the sale proceeds. You also can't have used the downsizer rule on a previous home sale.
The catch worth knowing about
It isn't a free lunch in every case. Moving money out of the family home (which is exempt from the age pension assets test) and into super (which is not, once you're of pension age) can affect income-support entitlements. Whether the downsizer contribution helps or hinders depends entirely on your personal circumstances — which is exactly why this is a conversation for your accountant or financial adviser, not your real estate agent.
Where we fit in
We're not licensed to give financial advice, and we won't pretend to. What we can do is help you time and structure the sale of the home itself so the proceeds — and the 90-day contribution window — land the way your adviser wants them to. If downsizing is on your horizon, talk to your adviser about the super side, and talk to us about the sale. A no-obligation appraisal is a sensible first step.
