Super News - Why you should consider downsizing at 65

07 March 2019

Mark Wilkinson , Partner, Superannuation |

When saving for retirement you are likely to focus on maximising your superannuation savings throughout your working life. The home downsizer contribution enables you to make a last contribution after you have turned 65 and without having to meet a work participation test.

Why is the home downsizer contribution important?

The home downsizer contribution was originally proposed in the Federal Budget of 2016 and applies from 1 July 2018. It is a measure designed to ease pressure on the skyrocketing home prices that existed at the time, and was intended to encourage empty-nesters to sell their properties, thus freeing up housing stock and, by default, reducing pressure on house prices.

While prices of houses may have eased since, the measure allows home owners selling after the age of 65 to roll up to $300,000 of the proceeds of their house sale into a superannuation fund, without having regard to whether they meet the work test or the amount of superannuation they have already accumulated.

What are the requirements?

To make a downsizer contribution, you need to meet the following conditions:

  • You are over the age of 65 at the time of contribution
  • The home you are selling must have been owned for at least a ten-year period
  • The home must be eligible to be treated as a principal place of residence under the Capital Gains Tax (CGT) provisions
  • The contribution must be made within 90 days of disposing of the home
  • You must tell the trustee of the fund that the contribution is a home downsizer contribution and not a non-concessional contribution
  • You are only eligible to use the home downsizer contribution concession once.

There are also three additional conditions to be aware of, which could benefit your position:

  • You are not required to meet the work test even though you are over the age of 65
  • You are eligible to make the downsizer contribution, even though you have already accumulated superannuation in excess of $1.6 million
  • There is no upper age limit applying to the contributions. For example, if you sell your house at age 100, and otherwise comply with the above conditions, then you will be eligible to make the downsizer contribution.

How do the provisions work in practice?

Example 1:

Sally and Charles, both 70, own a property as tenants in common with Sally’s brother Henry. Sally and Charles both own 40% of the property and Henry owns the remaining 20%.

Sally and Charles have lived in the house for 20 years and are eligible to treat their interest in the property as their principal place of residence, which is exempt from CGT under the main residence exemption.

The property is sold in 2023 for $700,000, and Sally and Charles, having satisfied the conditions of the home downsizer contribution, are eligible to contribute their share of the capital proceeds ($560,000) to the superannuation fund.

Note that Sally and Charles are not required to contribute equally to the fund. If Sally’s accumulated superannuation was much larger than Charles’, the contribution could be split with Charles contributing $300,000 and Sally contributing $260,000.

Example 2:

The provision provides individuals with a lot of flexibility in being able to structure their affairs.

Peter purchased his first house in 2003, which he let for a period of four years. The property did not satisfy the main residence exemption test during this period.

In 2007 Peter purchased a second rental property and began to live in the first property from that time. In 2020, having turned 65 years of age, Peter sells his first home, which at that point in time partially satisfies the main residence exemption.

Peter is able to make a downsizer contribution relating to the total proceeds received from the sale, of up to $300,000.

What does it mean for you?

The provision provides a large degree of flexibility for home owners over 65 years of age. It is worth noting that even though the legislation is referred to as the home downsizer provision, there is no requirement to downsize. In fact, there is no requirement that a replacement property be purchased at all.

Need help with your superannuation or financial planning?

If you found this information useful, please do not hesitate to contact your local BDO Superannuation expert.


Before making any investment or financial decisions you should consider, with or without the assistance of a professional adviser, your particular objectives, and financial circumstance or needs.

The information contained in this article is purely factual in nature and does not take into account your personal objectives, financial situation or needs. The information is objectively ascertainable and, therefore, does not constitute financial product advice. 

Further, the above information is provided as an information service only and, therefore, does not constitute financial product advice and should not be relied upon as financial product advice. If you require personal advice that takes into account of your particular objective, financial situation or needs, you should consult your BDO advisor who will be able to assist you in their capacity as Australian Financial Services licensee.