Super and retirement
You don't have to downsize to use the downsizer rule
Selling a home you have owned for at least ten years can let a couple move up to $600,000 into super, outside the usual contribution caps. The name is misleading, and the deadline is not forgiving.
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The downsizer contribution lets people aged 55 and over put up to $300,000 each into super from the proceeds of selling a home. Its name suggests a rule about moving somewhere smaller. It isn't.
There is no requirement to buy a replacement home, no requirement that the new place be cheaper, and no requirement to have retired. You can sell and move into a rental, move in with family, or go travelling. What matters is the property you sold, your age on the day the money goes in, and whether the paperwork reaches your fund in time.
Five things that have to be true
All of these apply at once. Missing any one of them turns the contribution into something else, which is where the real damage tends to happen.
You are at least 55
Your age is measured on the day the contribution is made, not the day you sold. There is no upper age limit, and no work test. The ATO will extend the 90 day deadline in some situations, but never to let someone reach their 55th birthday.
Ten years of ownership
You, your spouse, or a former spouse must have held an interest in the property, or the land it sits on, for the whole ten years before the sale. Time the home was held by a late spouse's estate counts, and so does a period your former spouse owned it before a separation. Ownership held through a company or a trust generally does not count.
It was your home, at least partly
The sale has to qualify for the main residence capital gains tax exemption in full or in part. It does not have to be your home when you sell it, or for the whole time you owned it. A former rental you later moved into can qualify. A property that was an investment for every year you owned it cannot.
An Australian dwelling
Houses, units and apartments count. Caravans, houseboats and mobile homes do not. Selling a subdivided vacant block on its own does not qualify either, because there is no dwelling in the sale.
You have never used it before
One home, one lifetime, one sale. If you have already made a downsizer contribution, no later property sale can be used, even if you contributed less than the full $300,000 the first time. The unused part is gone for good.
The 90 day clock
The contribution has to reach your super fund within 90 days of you receiving the sale proceeds, which is usually settlement day rather than the day contracts were signed. Alongside it, your fund needs the ATO's Downsizer contribution into super form, and it has to arrive before the money or with it. A form sent afterwards is too late, and the fund cannot fix it retrospectively.
Settlement. You receive the proceeds and the clock starts.
Last day for the contribution to reach the fund, with the form already lodged.
If you are transferring the money electronically, work out how the form gets lodged before you press send. Funds have different processes, and a same-day transfer can easily beat a posted form.
Where a contribution fails any of the eligibility or timing rules, it is not refused. It is re-reported as an ordinary after-tax contribution, which can push you over your non-concessional cap and trigger an excess contributions assessment.
Why it is treated differently
A downsizer contribution sits outside the normal contribution system, which is what makes it useful to people who have run out of other ways to get money into super.
| Rule | Downsizer contribution | Ordinary after-tax contribution |
|---|---|---|
| Age | From 55, with no upper limit | Generally stops shortly after you turn 75 |
| Contribution caps | Does not count towards any cap | $130,000 in 2026/27, or up to $390,000 using the bring-forward rule |
| Large super balance | No balance test applies | Cap is nil if your total super balance reached $2.1 million at 30 June 2026 |
| How often | Once in your lifetime, from one home sale | Every year, while you remain eligible |
| Source of the money | Proceeds of the qualifying sale | Any savings |
| Timing | Within 90 days of receiving the proceeds | Any time during the financial year |
The two can also be used together. Someone eligible for both could move $300,000 in as a downsizer contribution and up to $390,000 more under the bring-forward rule in the same year, depending on their age and balance.
How much can actually go in
The limit is the lesser of $300,000 and your share of the sale proceeds. Proceeds are the gross amount received, so paying out a mortgage or covering agent and legal costs does not reduce what you can contribute. For a couple, each person is capped at $300,000, and the combined contributions cannot exceed the combined proceeds from their interests in the property.
Where a home sells for less than $600,000, that combined limit starts to bite. A couple selling for $500,000 could contribute $250,000 each, or split it unevenly, as long as the total stays within the proceeds they received. Ownership share matters too. Someone who owns 60% of a property sold for $400,000 has $240,000 of proceeds attributed to them, and that becomes their ceiling.
Where it quietly goes wrong
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The money is locked in
Being eligible at 55 does not mean you can spend it at 55. Like any other contribution, it is preserved until you meet a condition of release, which for most people means retiring after preservation age or turning 65. Contributing proceeds you will need for living costs, or for the next home, can leave you cash poor.
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There is no tax deduction
You cannot claim a downsizer contribution on your tax return. If the sale produced a taxable capital gain, because the property was a rental for part of the time, a personal deductible contribution may be the one that reduces the tax bill.
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Not every fund accepts them
Accepting downsizer contributions is optional for super funds, and self managed funds may need their trust deed checked. Confirm with the fund before settlement, not after.
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It lifts your balance for next year's rules
The contribution is added to your total super balance at the following 30 June. That figure is what decides whether you can make after-tax contributions, or use unused concessional cap from earlier years, in the year after. A large contribution now can close those doors later.
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Selling costs eat into the benefit
Agent fees, marketing, legal costs and stamp duty on the next property can absorb a meaningful share of what the move releases. The super benefit is real, but it is the amount left after the transaction, not the headline sale price.
The knock-on effects
Your home does not count towards the Age Pension assets test. Money sitting in super or a bank account generally does, once you have reached Age Pension age. Selling can therefore reduce a pension entitlement even though nothing about your lifestyle has changed.
Two rules soften this. Proceeds you genuinely intend to put towards a new home are exempt from the assets test for up to 24 months, extendable to 36 months where delays are outside your control, and are deemed at the lower rate during that period. Separately, super held in accumulation phase is not assessed at all until you reach Age Pension age, currently 67, which matters for couples where one partner is younger.
There is an estate planning side as well. A downsizer contribution joins the tax-free component of your super, which can reduce the tax an adult child pays on a death benefit. It also moves a large sum from an asset your will controls into one your beneficiary nomination controls. If your nomination is old, or your family situation is a blended one, the two documents can end up pointing in different directions.
Few people use it
Despite the size of the opportunity, take-up has stayed flat for years. ATO figures show the contribution is used by around twenty thousand people annually, out of millions of Australians in the eligible age group.
One home, one chance, ninety days.
Because the downsizer contribution can only ever be used once, the decision is as much about which sale to use it on as whether to use it at all. If you are thinking about selling, talk to your financial adviser before the contract is signed. The settlement date, your age when the contribution is made, and how the required form is provided to your super fund all matter under the rules, and some of these requirements cannot be fixed after the sale has progressed.