On 1 January 2023, the eligibility age to make downsizer contributions into super went down from 60 to 55 years old, so more people can now benefit from this measure.
It allows eligible home owners aged 55 or older to contribute up to $300,000
into their super from the proceeds of selling their main home. This allows you to give your super a boost to take advantage of the generous tax rates that apply to super. And did you know? Your spouse can also make a downsizer contribution from the
same proceeds, even if they don’t (part) own the home, as long as they meet all the other requirements. Here’s a brief overview of what you need to know.
Who’s eligible
To be eligible to make a downsizer contribution, you must meet all the following conditions:
- You’re at least 55 years of age at the time of making the contribution.
- The amount you contribute must be from proceeds from selling your home under a contract of sale that was exchanged on or after 1 July 2018.
- Prior to the sale, your home was owned by you or your spouse for 10 years or more.
- Your home is in Australia and isn’t a caravan, houseboat or other mobile home.
- The proceeds are either exempt or partially exempt from the capital gains tax (CGT) under the main residence exemption, or would be entitled to such an exemption if the home was a CGT instead of a pre-CGT asset.
- You make your downsizer contribution within 90 days of receiving the proceeds of the sale.
- You’ve not previously made a downsizer contribution to your super from the sale of another home.
How to make a downsizer contribution
You need to send us a completed Downsizer contribution into super form either before or at the time of making your downsizer contribution. If you don’t, we’ll treat any monies received as a personal contribution that will count towards your contribution caps.
What to consider
- The downsizer contribution isn’t an after-tax contribution. This means you can still make a downsizer contribution even if your total super balance exceeds $1.7 million. However, your downsizer contribution will be included as part of your total
super balance when it’s re-calculated to include all your contributions on 30 June at the end of the financial year.
- The downsizer contribution will count towards your transfer balance cap of $1.7 million. This cap restricts how much of your super you can move into a retirement phase account (such as a pension account).
- You can’t make downsizer contributions greater than the total amount of proceeds you received from the sale of your home.
- You can’t claim a tax deduction for this type of contribution, as the proceeds are from the sale of your home rather than your pre-tax earnings.
For more information, read our Downsizer contribution measure factsheet or visit the Australian Taxation Office (ATO) website.
Turn to Mine
If you want more information about the downsizer contribution measure, call us on 13 64 63 and we’ll be happy to help. We can provide general information about the measure and put you in touch with Mine Super Financial Advice for additional support
to help you decide what’s right for you. You can request an appointment online or by contacting us.