The downsizer contribution age reduced to age 55

Superannuation & Self-Managed Super Funds


The downsizer contribution age reduced to age 55

On 25 November 2022 the Social Services and Other legislation Amendment (incentivising Pensioners to downsize) Act 2022 was passed in the Senate.  The act provides additional incentives to downsize your family home and enhance your retirement financially.

One incentive is to reduce the age eligibility of making downsizer contributions for members to 55 from 1 January 2023.  The current 12-month asset test exemption for age pensioners will also be extended to 24 months.  This change will allow pensioners more time to purchase, build or restore a new home without the financial impact of their pension payments being impacted.

Since 1 July 2018 we have seen many Australians take up the governments offer to contribute up to $300,000 each partner using a Downsizer contribution.  With the downsizer contribution older Australians could contribute some of their proceeds from selling their family home into Super.  

It’s important to note there are no balance restrictions on contributing to superannuation, so members with balances over $1.7m are still eligible to contribute.  Members who have already retired are also entitled to contribute to their super.  A downsizer contribution is a good strategy to consider if you want to increase your Superannuation nest egg.

There are a few conditions to meet to be eligible:

  • The amount you are contributing must be from the proceeds of selling your home.
  • You and/or your partner must be 55 years old or older from 1 January 2023 (Age 60 upto 31 Decemebr 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 superform 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.

If you meet these requirements you enjoy the following benefits

  • You can make a downsizer contribution up to a maximum of $300,000(each spouse), you do not need to pass the work test.
  • Your downsizer contribution is not a non-concessional contributionand will not count towards your contributions caps.
  • You can still contribute if you have over $1.7m in the fund.
  • This will count towards your transfer balance cap for future years.
  • If the house was owned by one spouse, both spouses can contribute up to $300,000 each.
  • You don’t need to downsize, so long as the proceeds of the sale of the house is used to contribute to your super, you are not required to buy a smaller house. You can upsize your house with your separate funds.

Please note 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.

This information is general in nature and is provided by Partners Wealth Group. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information.