Contributing the proceeds of downsizing into superannuation measure was one of several announced in the 2017–18 Budget as part of the government’s package of reforms to reduce pressure on housing affordability in Australia.

About the downsizer measure

From 1 July 2018,

• If you are 65 years old or older and

• Meet the eligibility requirements, **

You may be able to choose to make a downsizer contribution into your superannuation of up to $300,000 from the proceeds of selling your home.

Your downsizer contribution

• Is not a non-concessional contribution and

• Will not count towards your contributions caps.

The downsizer contribution can still be made even if you have a total super balance greater than $1.6 million.

Your downsizer contribution will not affect your total superannuation balance until your total super balance is re-calculated to include all your contributions, including your downsizer contributions, on 30 June at the end of the financial year.

The downsizer contribution will count towards your transfer balance cap, currently set at $1.6 million. This cap applies when you move your super savings into retirement phase.

You can only access the downsizer scheme once. This means you can only make downsizing contributions for the sale or disposal of one home, including the sale of a part interest in a home. You cannot access the downsizer scheme again where there is a subsequent sale or disposal.

Downsizer contributions are not tax deductible and will be taken into account for determining eligibility for the age pension.

If you sell your home, are eligible and choose to make a downsizer contribution, there is no requirement for you to purchase another home.

Eligibility for the downsizer measure

You will be eligible to make a downsizer contribution to super if you can answer yes to all of the following:

• you are 65 years old or older at the time you make a downsizer contribution (there is no maximum age limit)

• the amount you are contributing is from the proceeds of selling your home where the contract of sale exchanged on or after 1 July 2018.

• your home was owned by you or your spouse for 10 years or more prior to the sale – the ownership period is generally calculated from the date of settlement of purchase to the date of settlement of sale.

• your home is in Australia and is not a caravan, houseboat, or other mobile home.

• the proceeds (capital gain or loss) from the sale of the home are either exempt or partially exempt from capital gains tax (CGT) under the main residence exemption or would be entitled to such an exemption if the home was a CGT rather than a pre-CGT (acquired before 20 September 1985) asset.

• you have provided your super fund with the Downsizer contribution into super form either before or at the time of making your downsizer contribution.

• you make your downsizer contribution within 90 days of receiving the proceeds of sale, which is usually at the date of settlement.

• you have not previously made a downsizer contribution to your super from the sale of another home.

Note:

If your home that was sold was only owned by one spouse, the spouse that did not have an ownership interest may also make a downsizer contribution, or have one made on their behalf, provided they meet all of the other requirements.
Downsizer contribution amounts.

If eligible, you can make a downsizer contribution up to a maximum of $300,000 (each). The contribution amount cannot be greater than the total proceeds of the sale of your home. The downsizer contribution would form part of the member’s tax-free component held in the fund.

Example 1
A couple, George and Jane, sell their home for $800,000. Each spouse can contribute of up to $300,000.