Facebook pixel skip to Main Content

Downsizing your home and contributing to superannuation. Downsizer contributions explained.

June 23, 2020

If you’re thinking about downsizing your home, you may be wondering what to do with the proceeds. One of the options you could be considering is downsizer contributions, contributing money to superannuation and benefiting from the many tax advantages it provides.

Your options will depend on your circumstances and you should seek advice from a professional, as the penalties for getting it wrong can be quite harsh.

Broadly speaking, the options available will depend on your age.

For those under the age of 65, you may be able to take advantage of both the concessional and non-concessional contribution caps. Depending on your individual circumstances (including what contributions you’ve made in the past) you may be able to contribute as much as $325,000 to superannuation. You need to be careful how much you contribute though, the penalties for exceeding contribution caps are heavy.

For those over the age of 65, you may also be able to take advantage of both the concessional and non-concessional contribution caps, but there are restrictions, particularly if you’re no longer working. Failing that, you may be able to take advantage of the downsizer contribution rules.

What are the Downsizer Contributions Rules?

  • You’ll need to be over the age of 65
  • The amount being contributed if from the proceeds of selling your home
  • You and/or your spouse owned the home for 10 or more years prior to the sale
  • The sale is exempt or partially exempt from CGT
  • You make the contribution within 90 days of the sale
  • You have to provide your superannuation fund with a downsizer contribution form

There are some other factors that you’ll need to consider before making the contribution, so make sure you get some advice or speak to the ATO before deciding to make the contribution.

What are some of the benefits of contributing to superannuation?

  • You’ll be able to invest the funds and likely benefit from superior long term returns compared to term deposits and savings accounts
  • Depending on the amount you contribute, you could make significant tax savings on investment earnings
  • You may be able to start a pension with the contributed funds and draw a tax free income to fund your retirement

Downsizing your home can be a great way to build your retirement assets. For some, it may be the difference between them living the retirement they want or not. For others, it could be a way to retire earlier than originally planned.

For more information about downsizer contributions or for retirement advice, call us on (03) 8782 3745 or book your discovery call.

Previous | Next

Is the cure for uncertainty, Certainty or Understanding?
The value of advice is more than just returns, tax and fee savings


Traveling During Retirement

Will I Still Be Able to Take Regular Holidays in Retirement?

Are you concerned about maintaining your travel habits and enjoying regular holidays as you approach…

Read more
Why Choose Aurora Wealth Retirement And Personal Financial Planner?

What Happens If I Outlive My Retirement Savings?

Retirement is a time many look forward to, but the thought of running out of…

Read more
Strategies For Maximising Age Pension While Working Part-Time

Is it ok to work part-time in retirement, and will it affect my age pension?

Yes, it is perfectly okay to work part-time in your retirement years, and the impact…

Read more

What Is the Best Way to Fund My Retirement Income?

Options for couples with an age gap If there is a bit of an age…

Read more

Micheal is a financial expert with over a decade of experience in the field. Growing up in countryside Victoria, and later moving to Melbourne to pursue higher education, Micheal has since then been working in the financial industry for over 13 years with much of his career spent as a financial advisor. He holds the prestigious Certified Financial Planner designation and is a registered member of the Financial Planning Association of Australia. Micheal is also a dedicated family man and proud father of 3 amazing children. When he isn’t working or spending time with his family, he enjoys outdoor activities such as hiking and camping.

Back To Top