7 benefits of boosting your super with downsizer contributions

Are you 55 or older, thinking about selling your home and eager to give your retirement savings a substantial lift? The government’s downsizer contribution scheme could allow you to put up to $300,000 from the sale of your house into your super – giving a huge boost to your financial future.

Benefits of making a downsizer contribution

1. Super balance boost

Downsizer contributions provide a way to boost your super balance, especially if you haven’t had the chance to save enough funds for retirement. 

2. Tax-free investment earnings

The earnings generated from your downsizer contribution can provide you with a tax-free source of income, assuming you have met the age requirements to move from the accumulation phase to drawdown retirement phase.

3. No work test requirement

No work test or upper age limits apply to downsizer contributions, providing the flexibility to take advantage of the downsizer contribution at any time. 

4. Concessional and non-concessional caps don’t apply

Downsizer contributions aren’t limited by regular concessional and non-concessional contribution caps. That means you can direct up to $300,000 beyond any funds already in your super.

5. There is no requirement to buy a new home

If you sell your main residence and make a downsizer contribution to your super, you’re not required to buy a new home with the money you might make on the sale. 

6. Both partners can benefit

For couples, both partners can participate in downsizer contributions, where up to $600,000 of sale proceeds may be invested into super.

7. No total super balance contribution restrictions

Downsizer contributions aren’t subject to the total super balance limit which restricts non-concessional contributions. This means if your balance is already above the limit, you can still make a contribution. 

Rules and other considerations to be aware of:

It’s important to note that while downsizer contributions are exempt from regular contribution caps, the funds will contribute towards your total super balance amount. They are also subject to the transfer balance cap (TBC).

The TBC applies when funds are moved from your super account into a retirement pension, where income generated from investments has a 0% tax rate. This amount is capped at $1.9 million in 2024/25 and any amount above, which will remain in super, will still be taxed at the accumulation rate of 15%.

Additional eligibility considerations include: 

• You must be aged 55 or over to make a downsizer contribution.

• The sold property must have been the primary place of residence at some point in time and have been owned by you or your spouse for at least 10 years.

• The sold property must be in Australia and excludes caravans, mobile homes and houseboats.

• A downsizer contribution must be made within 90 days of receiving the sale proceeds. 

• A downsizer contribution form must be submitted to your super fund before or when making your contribution.

• You can’t have previously made a downsizer contribution to super.

• The maximum amount of super savings that can be transferred into a retirement pension is currently $1.9 million, and will increase on 1 July 2025 to $2 million. For some individuals however, may have a transfer balance cap that is different to the standard transfer balance cap. Click here for more information about the transfer balance cap.

• Downsizing your home may impact your age pension eligibility as the family home is generally not considered an assessable asset when calculating entitlements. 

• The costs involved in selling a property and buying another one can be considerable.

• Downsizer contributions are not tax-deductible super contributions.

Where to go for more information

Depending on your personal circumstances, various other rules may apply, so it’s important to check with the Australian Taxation Office (ATO) or speak with an adviser before making any significant decisions. And for more tips on how to grow your super, check out these 10 ways to boost your super savings.