If you’re 55 or older, downsizer contributions offer a valuable opportunity to enhance your superannuation using the proceeds from selling your home. Here’s how the rules work and why more women are using this strategy.
What Are Downsizer Contributions?
Downsizer contributions allow eligible individuals to contribute up to $300,000 from the sale of their home to their superannuation fund. Couples can take advantage of this concession, contributing up to $600,000 in total. Key features include:
- No requirement to buy another property or “downsize” to a smaller home.
- Contributions are exempt from age limits, the work test, and the total super balance rules.
- Funds can be accessed after retirement, with specific age-based rules.
Why Are Women Leading the Charge?
In the 2023–24 financial year, 57% of downsizer contributions were made by women, with an average contribution of $262,000—slightly higher than men’s average of $259,000.
When Are Contributions Made?
- Most downsizer contributions occur between the ages of 65 and 69, as individuals near or enter retirement.
- Those aged 55 to 64 typically cannot access downsizer contributions until they reach at least 60 and are retired.
Eligibility and Benefits
To make a downsizer contribution:
- Age Requirement: You must be 55 years or older.
- Property Ownership: The home must have been owned for at least 10 years and meet eligibility criteria.
- No New Home Needed: There’s no requirement to purchase another property, whether larger or smaller.
For couples:
- Both members can contribute up to $300,000 each, even if only one spouse owned the property, provided other criteria are met.
Downsizer contributions are not limited by the total super balance rules, but the amount moved into a retirement pension is capped by the transfer balance cap.
Flexibility of Downsizer Contributions
If circumstances change:
- From age 65, downsizer contributions can be withdrawn from super, even if you’re still working.
- Before 65, access depends on retirement status and superannuation access rules.
Is This the Right Strategy for You?
Downsizer contributions can significantly boost your retirement savings while offering flexibility. However, eligibility and tax implications should be carefully considered.
Need Advice?
Contact us or speak with your financial adviser to explore whether downsizer contributions align with your personal financial goals. We’re here to help you make informed decisions for a secure retirement.
