Downsizing and Turbocharging Your Super

You can divert up to $300,000 of proceeds on the sale of your home into your super fund, penalty-free. 

Since the superannuation guarantee was introduced in 1992, Australia’s super laws and regulations have continuously changed. Keeping up with the changes means you are always at risk of falling foul of the rules or missing a benefit you did not know about. 

One change that has made it more beneficial is to downsize from a big empty nest to a more manageable property. The idea was to make downsizing easier for older Australians to make more homes available to younger families. 

From 1 July 2018, people aged 65 and older have been able to make a non-concessional (post-tax) superannuation contribution of up to $300,000 from the proceeds of selling their home. 

Pre-existing contribution caps and restrictions on people over 65 do not apply to the downsizer contribution. 

If you are under 65 you can already make non-concessional contributions of $100,000 per year, or $300,000 in a year using the three-year “bring forward” rule. 

Main residence 

All dwellings – apart from caravans, houseboats, and mobile homes – are eligible if the home is owned for 10 years before sale. 

You do not have to have lived in the home for the entire 10 years, but it must qualify as a “main residence” under Capital Gains Tax (CGT) exemption rules. 

If you are in doubt about this, or anything else about the provision, seek professional advice from us. 

You are eligible by virtue of selling the home, you do not have to immediately purchase a new home – but you do have to make the super contribution within 90 days of settlement on the sale. 

You can contribute any amount into super up to $300,000. 

This can be done only once in your lifetime; it is not available under any subsequent downsizing.