What is a downsizer contribution?
A downsizer contribution allows eligible Australians to contribute up to $300,000 from the proceeds of selling their home into their super fund. For couples that’s up to $600,000 combined. This contribution is not counted towards your concessional or non-concessional caps and there’s no upper age limit to make one.
It’s designed to help older Australians “right-size” their living arrangements while unlocking equity to support a more comfortable retirement.
Who is eligible
To make a downsizer contribution you must meet all of the following criteria:
- Be 55 years or older at the time of the contribution
- The home must be in Australia and not a caravan, houseboat or mobile home
- You or your spouse must have owned the home for at least 10 years
- The home must have been your main residence at some point and be fully or partially exempt from Capital Gains Tax
- The contribution must be made within 90 days of receiving the sale proceeds (usually the settlement date)
- You must not have made a downsizer contribution before
- You must submit the
ATO’s Downsizer Contribution formOpens in new window
available on the ANZ Staff Super website, as well as the ATO’s, to us before or at the time of making the contribution.
How much can you contribute?
The maximum downsizer contribution is $300,000 per person but it cannot exceed the total sale proceeds. For example if you sell your home for $500,000 the combined downsizer contributions for a couple cannot exceed that amount.
What difference can it make?
The benefits can be significant:
- Tax-effective growth: Super is one of the most tax-efficient ways to invest for retirement. Earnings in the retirement phase are generally tax-free.
- No work test: Unlike other voluntary contributions you don’t need to meet a work test to make a downsizer contribution.
- No age limit: Even if you’re over age 75 you can still contribute under this scheme.
However, there are important considerations:
- Age Pension impact The family home is exempt from the Age Pension Assets Test but once sold and contributed to super, the funds become assessable. This could reduce or eliminate your Age Pension entitlement. The proceeds of the sale are exempt from the Assets Test for the first 12 months granted you're planning on buying another home however they will be looked at under the Income Test. This could impact you if you are not looking to purchase a new home.
- One-time opportunity You can only make a downsizer contribution once in your lifetime.
- Transfer balance cap Downsizer contributions count toward your transfer balance cap (currently $2 million) which limits how much you can move into a tax-free retirement income stream.