Downsizing the family home and super contributions


Downsizing the family home is often part of the longer-term financial plans for many older Australians.

New government legislation may mean you could consider investing the proceeds of the sale of your family home to your superannuation, depending on your age and circumstances, as a downsizer contribution.

What is a downsizer contribution?

From 1 July 2018, a person aged 65 years or older may be eligible to make a downsizer contribution of up to $300,000 to a complying superannuation fund from the proceeds of the sale of their primary residence, which they owned for 10 years or more. The contract of sale must be exchanged on or after 1 July 2018.

A downsizer contribution is not a non-concessional contribution and will not count towards any of the contribution caps. A downsizer contribution can still be made if a person has a total super balance greater than $1.6 million or if they do not meet the work test requirements. It is a once-off option and doesn’t apply to the sale of any residences in the future.

The contribution must be made within 90 days of receiving the proceeds of sale, which is usually the date of settlement. Spouses, provided they are also aged 65 years or older, can also make downsizer contributions to their own superannuation from the same proceeds, even if they are not an owner of the property.

Making a downsizer contribution

To make a downsizer contribution, you’ll need to confirm that you are eligible and that your superannuation fund accepts downsizer contributions as not all funds do. (Please note: all BT superannuation funds will accept eligible downsizer contributions, unless you are in a defined benefit fund). If you are eligible, you’ll need to complete a downsizer contribution form and provide this together with your contribution to your complying superannuation fund.

You can find the downsizer contribution form and eligibility criteria at

What a contribution could look like

While the legislation only starts from 1 July 2018, here are some hypothetical examples of how downsizer contributions could work in different situations.

Hypothetical example 1:

Martin and Sharon are both aged in their 80s, own their home jointly and have lived in it for 25 years. They sell their home on 1 August 2018 for $550,000 and the settlement date is 13 September 2018. They are exempt from capital gains tax (due to the home having been their primary residence). Under the downsizer contribution measure, within 90 days, Sharon makes a downsizer contribution to her superannuation of $300,000 while Martin contributes $250,000 to his superannuation. Though the cap on downsizer contributions is $300,000, Martin only contributed $250,000 because the combined contributions cannot exceed the sale proceeds of their home. They could have also split the contributions evenly, contributing $275,000 each.

Hypothetical example 2:

Roger is aged 66, Mel is aged 63, and they live in a home purchased by Mel 20 years ago. Mel sells the home for $900,000 on 15 July 2018 and the proceeds are exempt from capital gains due to being the primary residence. Roger is able to make a downsizer contribution of up to $300,000 within the 90-day period but as Mel is less than 65 years old, she is unable to make a downsizer contribution.

Next: Contributing to a better outcome

How the bring-forward rules works for superannuation contributions and determining whether your clients are eligible.

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Information current as at May 2018. This information does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness, having regard to your personal objectives, financial situation and needs having regard to these factors before acting on it. This information provides an overview or summary only and it should not be considered a comprehensive statement on any matter or relied upon as such. This information may contain material provided by third parties derived from sources believed to be accurate at its issue date. While such material is published with necessary permission, no company in the Westpac Group accepts any responsibility for the accuracy or completeness of, or endorses any such material. Except where contrary to law, we intend by this notice to exclude liability for this material. Any super law considerations or comments outlined above are general statements only, based on an interpretation of the current super laws, and do not constitute legal advice. This publication has been prepared by BT - Part of Westpac Banking Corporation ABN 33 007 457 141 AFSL & Australian credit licence 233714.