Downsizer superannuation contributions

16 February 2018

Michael Ryan, Wealth Adviser |
Natasha Johnson, Wealth Adviser |

Legislation has now passed to encourage older Australians to downsize their home with the opportunity to contribute to super. This legislation, along with the First Home Super Saver Scheme, has been developed to encourage the baby-boomer generation and older Australians to downsize, thereby freeing up desirable properties and boosting housing supply. Importantly, it also helps older Australians boost their superannuation balances when they might otherwise be unable to do so.

The new legislation includes provisions for individuals who are aged 65 and over to contribute proceeds of up to $300,000 (per member of a couple) from the sale of their home into superannuation as long as they have owned the home for at least ten years.

It is also possible to use the proceeds from the sale of a rental property, owned for at least ten years, if you had treated the property as your primary residence at some stage. If all conditions are met, these contributions will not count towards your non-concessional contribution (NCC) cap (currently $100,000/year). In addition, the contributions will not be subject to the rules that ordinarily restrict those over the age of 65 contributing to super.

This opportunity only applies to eligible individuals who exchange contracts for the sale of their home on or after 1 July 2018.

After a sale of their home, a couple could contribute up to $600,000 ($300,000 each) into superannuation well into retirement when they would normally be unable to add to superannuation without meeting a work-test. Should either member of the couple also happen to meet the work-test (i.e. work 40 hours in a 30-day period and not yet aged 75), they could potentially add a further $100,000 each to superannuation in addition to the $600,000 already added.

The downsizer contributions can be made even if the individual’s super balance is above the new $1.6 million limit introduced at the beginning of this financial year.

The benefits of being able to add more money to superannuation primarily revolve around generating tax-free or low-tax income to fund living needs in retirement. Adding extra to superannuation may not be of any benefit if the individual’s personal taxable income is already very low. However, for retirees post age 65, another possible benefit is the ability to withdraw super and add it back in, which may provide tax benefits to the eventual estate when proceeds pass to non-dependant beneficiaries. 

Contact us to find out more or to see if this option is appropriate for you.


The information in this document reflects our understanding of existing legislation, proposed legislation, rulings, etc., as at the date of issue. In some cases, the information has been provided to us by third parties. While it is believed the information is accurate and reliable, this is not guaranteed in any way. The information is not, nor is it intended to be, comprehensive or a substitute for professional advice on specific circumstances.

The financial product advice or information in this document is of general nature only and has not taken into account the investment objectives, financial situation or particular needs of any particular person. Before making an investment decision on the basis of the advice above, a prospective investor needs to consider, with or without the assistance of a professional adviser, whether the advice is appropriate in the light of their particular investment needs, objectives and financial circumstances.