Boosting Your Retirement Savings

For many Australians, the family home is more than just an address, it’s where memories live. But as life changes, so do our needs. After years of maintaining a large property, the idea of something simpler, with more time and flexibility, starts to appeal.

Selling your home can open new doors, not just to a new lifestyle, but to new financial opportunities. One of the most effective ways to make the most of this transition is through a downsizer contribution, which allows you to move some of the proceeds from your home sale into superannuation and as a result give your retirement savings a meaningful boost.

Alan and Margaret, both in their early 70s and receiving a part Age Pension, found themselves in this position. After decades in their family home, weekends had started to feel more like work than rest, mowing lawns, cleaning rooms they no longer used, and keeping up with maintenance. They decided it was time to simplify. After buying a smaller home, they had $500,000 left over. By contributing this amount into super under the downsizer rules, they were able to start regular retirement income streams. This gave them reliable cash flow, reduced reliance on the Age Pension, and more freedom for travel, family time, and everyday enjoyment, all while still owning their new home.

For many retirees, this type of strategy offers a practical way to unlock home equity and strengthen long-term financial security.

How Does It Work?

If you are aged 55 or older, you can make a one-off contribution of up to $300,000 from the proceeds of selling your principal residence directly into super.

Key points:
         • It does not count towards your concessional or non-concessional contribution caps.
         • The money goes into the tax-free component of your super.
         • You can contribute up to the lesser of $300,000 or the actual sale proceeds.
         • Couples may both be eligible, meaning up to $600,000 per couple can be added to super from the same sale.
         • A couple can only use the downsizer contribution once, from the sale of one eligible home.

Eligibility Rules

To qualify for a downsizer contribution:
       • You must be 55 or older at the time of contributing (no upper age limit).
       • You or your spouse must have owned the home for at least 10 years.
       • The sale must qualify, at least in part, for the main residence capital gains tax (CGT) exemption.
       • The contribution must be made within 90 days of settlement (not contract date).
       • You must complete a downsizer contribution form and provide it to your super fund when making the contribution.
       • You cannot have previously made a downsizer contribution from another home.

Despite the name, there is no requirement to actually downsize. You can buy a more expensive home, rent, or not buy another property at all; the contribution is still permitted.

Things to Consider

Centrelink
Any net proceeds remaining after downsizing your home are counted as part of your assessable assets for Age Pension purposes. These funds are treated the same by Centrelink whether they are held personally, invested, or contributed into super.

Liquidity
Super is generally preserved until you reach a condition of release (such as turning 65 or retiring). If you need immediate access to funds for living expenses, helping family, or buying another property, locking too much into super may reduce flexibility.

Combining with Other Contributions
Because it sits outside the standard contribution caps, downsizer contributions can be combined with other strategies. For example, eligible clients may contribute $300,000 via downsizer plus $360,000 under the bring-forward non-concessional rules, that’s up to $660,000 each (or $1.32 million per couple) into super in one go.

Estate Planning
Downsizer contributions increase the tax-free component of super, which can improve outcomes for adult children and other non-dependant beneficiaries, as tax is not payable on the tax-free portion.

If you are considering selling your home in the next few years, the downsizer rules could help you turn that decision into a real financial advantage, giving you more choice, control, and comfort in retirement. It is a valuable strategy for later life, a way to unlock home equity, strengthen your retirement savings, support a steady income, reduce reliance on the Age Pension, and enjoy greater confidence and flexibility in retirement.

Like any strategy, it comes with important considerations, so before acting, it is best to seek financial and tax advice tailored to your circumstances. Talk to your financial adviser about whether a downsizer contribution could be the right move for you.

This article is designed to help you understand how a downsizer contribution can work. It does not provide any recommendations or personal advice and may not apply to your individual circumstances. You should seek personalised financial advice before making any decisions.