Australians 60 and over may use downsizer scheme to top up super

Eligible Australians aged 60 and over may be able to use some of the proceeds from the sale of the family home to top up their superannuation, under a change in the rules reducing the downsizer eligibility age from 65 years to 60.

From 1 July 2022, the minimum age for the downsizer contribution is 60 years.¹

Downsizer super contributions allow eligible Australians nearing retirement to make a one-off contribution of up to $300,000 per person (or $600,000 per couple) when they sell their family home.

Downsize your home to upsize your super

The downsizer scheme was introduced in the 2017-18 budget.

It now allows people aged 60 or over to make a one-off contribution to their super account worth up to $300,000 after selling their home, outside of the normal rules governing the tax treatment of super contributions.

Who is downsizing?

Australian Government figures showed that in 2018-19, the first year of the downsizer scheme, 4,246 individuals across Australia downsized from their family homes, contributing $1 billion to their superannuation funds.²

In 2019-20, the second year of the scheme, more than 520 members with a QSuper account made downsizer contributions, with the average contribution around $200,000 and an average age of 73. The total of these contributions was almost $97 million.³

How the downsizer contribution works

If you are eligible, the downsizer contribution is an amount of up to $300,000 that can be paid in to your super, from the proceeds of selling your home. If you have a spouse, the total contribution is up to $600,000 ($300,000 each).

Your downsizer contribution is not a non-concessional contribution and will not count towards your contributions caps.

People with balances over the transfer balance cap (which is $1.7 million) are also able to make a downsizer contribution, however the downsizer amount will count towards that cap when savings are converted to the retirement phase.

Who is eligible for the downsizer scheme?

You (and if applicable, your spouse) will be eligible to make a downsizer contribution to super if you can answer yes to all of the following:

• You are 60 years old or older at the time you make a downsizer contribution (there is no maximum age limit).
• You make your downsizer contribution within 90 days of receiving the proceeds of sale, which is usually at the date of settlement.
• The amount you are contributing is from the proceeds of selling your home, where the contract of sale was exchanged on or after 1 July 2018.
• Your home was owned by you or your spouse for 10 years or more prior to the sale (the ownership period is generally calculated from the date of settlement of purchase, to the date of settlement of sale).
• Your home is in Australia and is not a caravan, houseboat, or other mobile home.
• The proceeds (capital gain or loss) from the sale of the home are either exempt, or partially exempt from capital gains tax (CGT) under the main residence exemption, or would be entitled to such an exemption, if the home was a CGT rather than a pre‐CGT (acquired before 20 September 1985) asset.
• You have provided your super fund with the Downsizer Contribution into Superannuation form either before, or at the time of making your downsizer contribution.
• You have not previously made a downsizer contribution to your super from the sale of another home.

What could a Downsizer contribution mean for your retirement income?

The examples below show how utilising the downsizer scheme may impact your retirement. The examples are illustrative only.

A 60-year-old adding $200,000 to your super balance would be able to draw an additional tax-free income of $16,351 per year until age 88.⁴

A 60-year-old adding $300,000 to your super balance would be able to draw an additional tax-free income of $24,527 per year until age 88.⁵

Interested in making a downsizer contribution?

1. Australian Taxation Office, modified 28 February 2022, Downsizing contributions into superannuation, accessed 7 June 2022 at ato.gov.au
2. QSuper member data.
3. Media Release, 28 June 2019, Downsizer contributions reach $1 billion, at ministers.treasury.gov.au
4. These figures are illustrative only and assume an earnings rate of 7.5% p.a. (net of fees and taxes) and the $16,351 in annual income being indexed to CPI each year. Figures have been rounded for ease of understanding. Members should seek advice regarding their own circumstances.
5. These figures are illustrative only and assume an earnings rate of 7.5% p.a. (net of fees and taxes) and the $24,527 in annual income being indexed to CPI each year.) Figures have been rounded for ease of understanding. Members should seek advice regarding their own circumstances.