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Downsizer super contribution due to be available to 60-year-olds

March/April 2022 

Since 1 July 2018 many Australians aged 65 or older have taken up the Federal Government’s “downsizer contribution” offer, enabling them to contribute up to $300,000 into their superannuation from the sale of their residential home.  In an exciting change to the legislation, as of 1 July 2022 this option will become available to people from the age of 60 instead of 65.

What is the downsizer contribution and what are the benefits? 

A downsizer contribution is a lump-sum contribution to your superannuation resulting from the sale of your home. It is a good strategy to consider if your clients want to increase their superannuation nest egg and comes with a range of benefits for your clients:  

  • You and your spouse can make a downsizer contribution of up to $300,000 each without needing to pass the work test.  
  • Your contribution is not a non-concessional contribution and will not count towards your contributions caps. 
  • No balance restrictions - you can still contribute if you have over $1.7m in the fund.  
  • Even if your house was owned by one spouse, both spouses can contribute up to $300,000 each. 
  • You don’t need to actually downsize your house. So long as the proceeds of the sale are used to contribute to your super, you are not required to buy a smaller house. In fact, you can upsize your house with your separate funds. 
Am I eligible? 

There are a few conditions that need to be met to be eligible for the downsizer contribution: 

  • The amount you are contributing must be from the proceeds of selling your home. 
  • You and/or your partner must be 65 years old or older (60 years old from 1 July 2022). 
  • Your home was owned by you or your spouse for 10 years or more prior to the 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). 
  • You have provided your super fund with the Downsizer Contribution Into Super form either before, or at the time of, making your downsizer contribution. 
  • You make your downsizer contribution within 90 days of receiving the proceeds of sale, which is usually at the date of settlement. 
  • You have not previously made a downsizer contribution to your super from the sale of another home. 
Are there any restrictions? 

There are no balance restrictions on contributing to superannuation, so members with balances over $1.7m are still eligible.  Members who have already retired are also entitled to contribute to their super.   

Please note that for social security purposes, your superannuation interest is an assessable asset and subject to deeming once you are over pension age.  There is no social security concession for the downsizer contributions.  If affected, we suggest you seek financial advice. 

Want to know more? 

If you’d like to know more about how you can utilise the Downsizer Super Contribution to maximise your clients retirement savings, please contact Senior Financial Advisor Ben Savige on 0400 003 904 or email bsavige@pwg.com.au  

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