Downsize your home to build a better retirement

29 June 2022

The great Australian dream of owning your own home has seen a generation pour their savings into property in the form of the family home. Once the kids have left however, many people are left with a large house that may no longer suit their lifestyle. Now it’s possible to turn the equity tied up in family home into a better life in retirement, through downsizer contributions.

Downsizer contributions enable individuals to make a one-off, after-tax contribution to their super of up to $300,000 per person (or $600,000 per couple) from the proceeds of selling their home. The main benefit of downsizer contributions is that it doesn’t count towards the non-concessional contribution cap, currently $110,000 per year (or $330,000 over 3 years under the bring forward provision).

Downsizer contributions have been around since 2018, but from 1 July 2022 the eligibility age has been reduced from 65 to 60, providing more options for those close to (or in) retirement to give their super a significant lift. As part of the 2022 Federal Election the new government has indicated it will reduce the eligibility age even further to 55 years. It could be a great opportunity for those living in areas where property prices have boomed in recent years.

And as another bonus, even though it’s called a downsizer contribution there’s no requirement to purchase another property to make the contribution. 

Who can make a downsizer contribution?

As well as being age 60 or over, the other main eligibility criteria are:

  • the home must be in Australia
  • the contributor (or their spouse) must have owned the home for at least 10 years and the disposal must be exempt or partially exempt from capital gains tax
  • the contributor must not have previously made a downsizer contribution to their super from the sale (or part-sale) of another home
  • the contribution generally needs to be made within 90 days of the home being sold.
Who could benefit?

The main benefit of downsizer contributions is being able to tap into the equity in your home to improve your standard of living in retirement. It’s relevant for all homeowners, and could be particularly useful for those without other assets or income.

In addition, downsizer contributions provide an opportunity for members who might not otherwise be eligible to contribute to super, including members who:

  • are over 75 who are usually restricted from making personal contributions to super 
  • are over 60 who have reached their contributions cap, and  
  • have a total super balance of over $1.7 million (which would normally prevent them from making a contribution).
Keep in mind
  • Downsizer contributions are not considered non-concessional contribution and therefore won't count towards the contributions cap.
  • However, they do count towards your transfer balance cap. This cap applies when you move your super savings into retirement phase and will be considered for determining eligibility for the age pension.
  • Contributions can’t be made to a pension account once the pension has started, so you might need to set up a new super account or roll back your pension into super before making a downsizer contribution.
How to make a contribution

When making a downsizer contribution, you need to complete the Australian Taxation Offices (ATO)’s Downsizer contribution form. If you’re making multiple contributions, you must provide a form for each contribution and submit them all within 90 days of receiving the proceeds of the sale.

To make the downsizer contribution to an existing Suncorp super account, please send your completed form(s) to us along with an Additional investment form.

Need more information?

The ATO’s website has more information about downsizer contributions or speak with your financial planner to find out more.

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