For clients aged 55 and over, selling the family home could offer more than just a change of scenery, it could be a powerful opportunity to strengthen your retirement strategy. Through the downsizer contribution scheme, eligible individuals can invest proceeds from the sale directly into superannuation, helping boost long-term financial security.
At Angkor CA, we help clients turn complex regulations into confident decisions. Here’s how this strategy works, and why it might be worth considering.
What Is a Downsizer Contribution?
A downsizer contribution allows eligible Australians aged 55+ to contribute up to $300,000 from the sale of their main residence directly into superannuation. For couples, that’s up to $600,000 combined. This contribution doesn’t count toward your standard concessional or non-concessional contribution caps, making it a rare chance to move substantial funds into a tax-effective environment.
We often see retirees who’ve sold properties in Melbourne or regional centres unsure about what to do next with the proceeds, this measure gives clarity and structure to that transition.
Who Can Make a Downsizer Contribution?
To qualify, you must meet these criteria:
- Age: You must be 55 or older at the time you make the contribution.
- Ownership: The home must have been your primary residence and owned for at least 10 years by you or your spouse.
- Capital Gains Tax: It must be eligible for full or partial exemption under the main residence exemption.
- Timing: The contribution must be made within 90 days of receiving the sale proceeds (usually settlement).
- Limit: It’s a one-time opportunity. $300,000 per person, once only.
It’s critical that clients don’t miss the 90-day deadline. We’ve had cases where late action led to rejected contributions, planning early can save headaches later.
Key Benefits
- Boost Your Super: Move significant funds into super, without breaching contribution caps.
- Tax-effective Growth: Superannuation offers favourable tax treatment, especially post-retirement.
- Investment Choice: Allocate your contribution across a wide range of assets within your super fund.
- Estate Planning: Consolidating funds in super may simplify your future financial arrangements.
How to Make the Contribution
- Sell your eligible property, and confirm it meets criteria.
- Complete the ATO Downsizer Contribution Form.
- Submit the form to your super fund, before or when making the contribution.
- Transfer the funds within 90 days of settlement.
Tip: Don’t wait until settlement day to begin prep, get advice as early as the listing phase.
Important Considerations
This opportunity comes with some caveats:
- Centrelink Impact: Once in super, the funds count towards your assets/income tests. This may affect Age Pension entitlements.
- Super Access: Depending on your retirement status, funds may not be accessible immediately.
- Strict Deadlines: Late contributions are rarely accepted, timing is everything.
Let’s Make Your Retirement Strategy Work Harder
Selling your home is a major milestone, and downsizer contributions can help convert real estate equity into long-term retirement value. But the rules are strict and the process needs care.
If you’re thinking about making a downsizer contribution, speak to our team before you sell. We’ll guide you through eligibility, ensure ATO compliance, and help tailor the strategy to your retirement goals.