Downsizer Super Contributions

Sep 11

2 min read

With shifting property values and many clients looking closely at their retirement strategies, it’s an interesting time to think about the downsizer contribution.

If you're 55 or over and thinking about selling your main residence (or a portion of it), the downsizer contribution is one way to make a large contribution without eating into your non-concessional and other contribution caps.

The Basics

If you sell a home you've owned for at least 10 years (and it qualifies for the main residence CGT exemption), you can contribute up to $300,000 of the sale proceeds into super - or up to $600,000 for a couple. This is in addition to the usual concessional and non-concessional caps; the downsizer contribution sits separately to these.

Some things to note:

No work test is required to be met in order to make this contribution.
No upper age limit - as long as you meet the other conditions there's no age cut-off.
Even if your total super balance exceeds the limits that normally apply to other contributions, you can still make a downsizer contribution. (While the downsizer contribution itself isn't restricted by your total super balance, it will count towards your transfer balance cap once you move those funds into the retirement/ pension phase).
Both members of a couple can contribute, even if only one owned the home or only one lived in it, as long as the ownership and other conditions are met.

The Conditions

You (or your spouse) must have owned the property for at least 10 years.
The property must qualify (at least partially) for the main residence CGT exemption. This means it could now be a holiday home – so long as at some point it qualified as your main residence and you’re eligible to apply at least a partial main residence CGT exemption.
The contribution must be made within 90 days of receiving the sale proceeds (usually settlement), and you must lodge the Downsizer Contribution into Super Form with your fund before or at the time of contributing. Failing to do so means it will count toward your standard contribution caps instead.
You have not previously made a downsizer contribution from the sale of another home or the part sale of your current home.
Total downsizer contributions made cannot exceed the total sale proceeds from the home.

Get in Touch

Thinking about downsizing or already have a sale in progress? The 90-day contribution window has tripped people. It's worth checking your position before you sign a contract - not after settlement. Get in touch with Richard at Mint CA to talk through your eligibility for the downsizer contribution.