Retirement
Maximising your benefits with downsizer contributions
Downsizing your home can be an emotional and financial milestone, especially if you’re approaching or already in retirement.
Maximising your benefits with downsizer contributions
Downsizing your home can be an emotional and financial milestone, especially if you’re approaching or already in retirement.

It may also present an excellent opportunity to boost your superannuation through the Australian government’s downsizer contributions scheme.
Here’s a comprehensive guide on how to make the most out of this potentially lucrative option.
What are downsizer contributions?
Introduced in July 2018, the downsizer contributions scheme allows Australians aged 65 or older to contribute up to $300,000 from the proceeds of selling their home into their super fund. Importantly, these contributions don’t count towards the usual non-concessional (after-tax) contributions cap.
Benefits of downsizer contributions
- Tax Efficiency is a key advantage when it comes to contributing to superannuation funds, as these contributions are typically subject to concessional taxation rates. By making use of the Downsizer Contributions scheme, you can harness this tax benefit to potentially enhance the overall value of your superannuation, ensuring a more efficient growth of your retirement savings.
- Contributing a substantial one-off amount can have a significant impact on your super balance, offering added financial security during your retirement years. This can be particularly valuable if you haven't had the opportunity to make substantial contributions to your super fund over the course of your career.
- Unlike other types of super contributions, downsizer contributions do not require you to meet the work test. This means that even if you have retired and are no longer actively working, you can still make a downsizer contribution to bolster your super fund.
- The $300,000 downsizer contribution is exempt from the non-concessional contributions cap, enabling a substantial boost to your superannuation regardless of your current balance. This exemption means that even if you've reached your contributions cap for the year, you can still make a downsizer contribution without exceeding the established limit.
Eligibility criteria
To be eligible for downsizer contributions, you must be 65 years or older. This ensures that the scheme is specifically targeted towards individuals who are approaching or already in retirement.

The property sold must have been your primary residence and owned for at least 10 years. This requirement ensures that the scheme is used by individuals who have lived in their homes for a significant period of time and are downsizing to a smaller residence.
You can only make downsizer contributions for the sale of one home. Subsequent home sales are not eligible for downsizer contributions. This limitation ensures that the scheme is not abused by individuals who continuously sell and downsize their properties.
Effective strategies
1. Financial Planning
Consult a financial adviser to see how the downsizer contribution aligns with your overall retirement strategy. A financial adviser can help you understand the potential benefits and risks associated with making a downsizer contribution and how it fits into your broader financial plan.
2. Timing
Choose the timing of your property sale wisely. Market conditions can significantly impact the proceeds you receive. It is important to carefully consider the state of the property market and the potential impact on the sale price of your home. By selling your property during a favourable market condition, you may be able to maximise the amount of money you receive from the sale and, in turn, contribute a larger amount to your super fund.
3. Contributions Split
Couples can split the $300,000 contribution limit between them, potentially allowing for a combined contribution of $600,000 into their super funds. This is a significant advantage for couples who are both eligible for downsizer contributions as it allows them to contribute a larger amount to their super funds and increase their overall retirement savings.
Potential pitfalls
Adding a significant amount to your super may impact your eligibility for the Age Pension. The Age Pension is a means-tested government benefit that provides income support to eligible Australians in retirement. By increasing your super balance through downsizer contributions, you may exceed the asset and income thresholds for the Age Pension and become ineligible for the benefit. It is important to discuss this potential impact with a financial adviser to understand the implications fully.
You must make the downsizer contribution within 90 days of receiving the sale proceeds, so swift action is essential. It is important to be aware of this time limit and ensure that you have the necessary arrangements in place to make the contribution within the specified timeframe. Failure to do so may result in the loss of the opportunity to make a downsizer contribution.
Conclusion
The downsizer contributions scheme offers a compelling option for Australians aged 65 and older to bolster their superannuation while transitioning to a smaller residence. However, it’s crucial to understand both the benefits and potential downsides, such as the impact on Age Pension eligibility.
By understanding and properly utilising the downsizer contributions scheme, Australians can take a significant step toward a more secure and rewarding retirement. Financial planning and consultation with professionals are essential steps before making this significant financial decision.
This article is intended for informational purposes and should not be considered as financial advice. Consult a financial adviser for tailored advice to suit your individual circumstances.

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