Since its introduction in 2018, billions of dollars have been contributed through the downsizer superannuation scheme. This option is widely used, yet three common misconceptions prevent even more people from taking advantage of it.
Introduction
The downsizer superannuation rules allow individuals aged 55 and over to contribute up to $300,000 to their superannuation fund after selling their home. While there are age restrictions on making contributions, there is no upper age limit. This feature makes downsizer contributions particularly beneficial for those who would otherwise be unable to make superannuation contributions due to age limitations.
Additionally, individuals seeking to contribute significant sums find the downsizer contribution appealing, as it enables them to exceed standard contribution caps.
However, the term “downsizer super contribution” has led to misunderstandings regarding eligibility and timing. It is always advisable to consult a financial adviser to confirm eligibility. However, do not let the following three common myths discourage you from making a downsizer contribution.
Myth 1: You Must “Downsize” Your Home
A frequent misconception is that making a downsizer contribution requires purchasing a smaller or less expensive home. In reality, while selling your home is a requirement, there is no obligation to buy a cheaper property—or even to purchase another home at all. Some individuals choose to "upsize" instead, using other financial resources to make their downsizer contribution.
Myth 2: The Contribution Must Come Directly from the Sale Proceeds
It is not necessary for the downsizer contribution to be made directly from the proceeds of the home sale. If the entire sale amount is used to purchase a new home, individuals may use other savings or assets to fund the contribution.
Furthermore, in certain cases, contributions may be made as "in-specie" transfers—meaning assets such as listed
shares may be contributed instead of cash. However, the value of the asset must not exceed the lower of either the sale proceeds or
$300,000.
It is important to note that in-specie contributions are generally only accepted by self-managed superannuation funds (SMSFs)
and are limited to specific asset types, including listed shares, business real property, and units in widely held unit trusts
such as managed funds.
Myth 3: You Must Be Living in the Home at the Time of Sale
Another common misunderstanding is that you must be residing in the home when it is sold. While it is required that you have lived in the property at some point, there is no requirement to be living in it at the time of sale.
Eligibility for the downsizer contribution is linked to qualifying for at least a partial main residence capital gains tax (CGT)
exemption.
This means that as long as the property was once your main residence, you may still qualify—even if you were not living in it at the time of
sale.
Conclusion & Eligibility Checklist
Understanding the downsizer superannuation rules can help dispel common myths and ensure you make informed financial decisions. While it is always advisable to consult a financial adviser to confirm your eligibility, the following checklist may assist in determining whether you meet the basic requirements.
| Rule # |
Eligibility Requirement |
Check |
| 1 |
You are aged 55 or over at the time of making the contribution |
✅ |
| 2 |
You have sold an eligible home (dwelling) |
✅ |
| 3 |
You or your spouse have held an interest in the dwelling for at least 10 years |
✅ |
| 4 |
The sale is at least partially eligible for the main residence capital gains tax (CGT) exemption or would have been if the property was
not a pre-CGT asset |
✅ |
| 5 |
The contribution is made within 90 days of receiving the sale proceeds |
✅ |
| 6 |
The contribution amount does not exceed the lower of $300,000 or the sale proceeds |
✅ |
| 7 |
You have not previously made a downsizer contribution from the sale of another home |
✅ |
Important Reminder
Before making a downsizer contribution, ensure you submit the “Downsizer Contribution into Super Form” (NAT 75073) to your super fund before or at the time of making the contribution to comply with the necessary reporting requirements.
