Downsizing your home
Downsizing your home can help upsize your super – so you may have more money when you retire
Benefits
Selling your family home and contributing all, or some, of the sale proceeds to your super account can be a great way to give your super a boost.
How it works
- You must be 55 or over at the time of making the contribution
- You (or your spouse) must have owned your home for at least 10 years
- You can contribute up to $300,000 individually (or $600,000 as a couple)
- The home being sold must have been your primary residence (i.e. the sale is exempt, or partially exempt, from capital gains tax) and a residential building in Australia (it can’t be a caravan, houseboat or mobile home)
- The downsizer contribution must be made within 90 days of receiving the sale proceeds. This usually happens at settlement, unless the ATO has granted an extension
- You can’t have previously made a downsizer contribution in relation to another home
- You must complete the ‘Downsizer contribution into super form’ and provide it to your fund before or at the time you make the contribution.
Important!
Selling your home and making a downsizer contribution could affect your eligibility for the government benefits such as the Age Pension. You should get advice before making any decisions.
How to make a downsizer contribution
To make a downsizer contribution complete the Downsizer contribution into super form from the ATO and provide this to us before or when you make your super contribution.
Downsizer contributions can only be made by cheque, payable to CareSuper.
If you make more than one downsizer contribution, you’ll need to provide a form for each contribution.
All downsizer contributions must be made within 90 days of receiving the sale proceeds from your home. You may be eligible to apply to the ATO for an extension of time in some circumstances.
For all the T&Cs, check the ATO website.
See how it works
Cheryl (69) is retired and has decided to sell the family home to move interstate and be closer to her family.
The sale proceeds are $800,000. She can make a downsizer contribution of $300,000 into her super account.
Brett and Sally (both 62) still work part-time, and are now empty nesters.
They decide to sell their large family home and buy a small apartment. With the sale proceeds of $700,000, they can both make a downsizer contribution of up to $300,000 each ($600,000 in total) into super.
Eric (76) and Joan (68) are both retired and decide to sell their home and travel.
With the sale proceeds of $400,000, they can contribute a maximum of $400,000 into their super. This means they can contribute half ($200,000) each or split it – for example, $300,000 for one and $100,000 for the other.
More information
#Up to $300,000 for singles.
FAQs
Some of the main benefits of downsizer contributions include:
- Potential tax benefits: including no tax payable when you make the contribution, and if you move it to a Retirement Income account you generally won’t pay tax on investment earnings
- It’s a non-concessional contribution, but doesn’t count toward the non-concessional cap
- You can contribute regardless of whether or not you’re still working – there’s no upper age limit or work test
Some limitations of the downsizer contributions include:
- They count towards your transfer balance cap. This is a lifetime limit on the total amount of super that can be transferred into retirement phase income streams.
- They’ll be included in your total super balance when it's recalculated at the end of the financial year. This may affect your future eligibility under some super rules and entitlements.
- Downsizer contributions aren’t tax deductible.
- It may affect your eligibility for Centrelink benefits such as the Age Pension.
It’s a good idea to seek financial advice before you make a downsizer contribution, to make sure it’s right for your circumstances. You have access to financial advice as part of your membership.
Yes, however, you need to have an accumulation (super) account to make your downsizer contribution. This is because you can’t make any further contributions to a Retirement Income account once it has been opened. So, if you’d like to move your downsizer contribution into a Retirement Income account, you’ll need to contribute it to an accumulation account first, then start a new Retirement Income account.
Give us a call on 1800 005 166 if you need help with downsizer contributions – we can talk you through your options.
Yes, both you and your partner can make a downsizer contribution following the sale of your home.
This is the case as long as the combined value of your two contributions will not exceed the sale price and the spouse that didn’t have an ownership interest meets all the other requirements.
Give us a call on 1800 005 166 if you need help with downsizer contributions – we can talk you through your options.
No, you don’t have to be married to take advantage of the downsizer contribution rules.
As a single person you can contribute up to $300,000 under the downsizer rules, and as a couple, regardless of whether you’re married or in a de-facto relationship, you can contribute up to $600,000 (a maximum of $300,000 each).
Downsizer contributions can affect your eligibility for government benefits like the Age Pension.
The Government uses income and assets tests to assess if you’re eligible to receive benefits.
When you make a downsizer contribution, this adds money into your super account. Your super and retirement account balances may impact your income and assets test assessments, depending on your personal circumstances.
If you’re currently receiving government benefits, or if you’re thinking of applying for benefits in the future, it’s a good idea to get financial advice before making a downsizer contribution to your super to see how it might affect your entitlements.
You have access to financial advice to sort your super at no extra cost, it’s part of your membership.
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