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Downsize your home and boost retirement savings

🕑 4 minutes read


In the Federal Government’s 2017 Budget, a proposal was announced that is designed to encourage older Australians to free up housing stock and access equity in their home to help boost their retirement savings.

About the downsizer contributions measures

  • It may be available to you if you are 65 years or older (the typical cut off age for super contributions)
  • You may be able to contribute up to $300,000 per individual from the sale of an ownership interest in an Australian home, where the sale contract is entered into on or after 1 July 2018.
  • It will not count against the concessional, non-concessional (NCC), capital gain tax (CGT) or personal injury contribution caps.
  • Work test requirements are not applicable.
  • It will not be subject to the Total Super Balance (TSB) cap (although it will count towards an individual’s TSB for NCC purposes. Where downsizer contributions cause the person to breach their TSB cap, the client may not have the ability to make NCCs in the following financial year)


  • Sign or exchange contracts on or after 1 July 2018 and submit your super contribution, along with the ATO’s downsizer contribution form, within 90 days of settlement (unless an extension is approved by the Tax Commissioner)
  • Are 65 years or older at the time the contribution is made
  • Make a contribution from proceeds of the sale of a qualifying property in Australia that you or your spouse/former spouse owned for at least 10 years up to the date of sale
  • Qualify for the partial or full main residence exemption for CGT purposes
  • Have not made downsizer contributions from the proceeds of an earlier sale of a main residence

The Home – Eligibility Ownership Interest

  • May be a house, ‘semi’, unit on strata or company title, or the right or licence to occupy these types of dwellings
  • It does not apply to caravans, mobile homes and houseboats.
  • You or your spouse must have owned the home for at least 10 years just before its disposal
  • The period of ownership by a former spouse will count towards this ownership period. This allows for situations where a home passes to a spouse because of a relationship breakdown or where the former spouse has passed away

Defining ‘Downsizing’

  • There are no requirement to move into a smaller home. In fact, there is no requirement to purchase another home
  • You may choose to move to an existing property, rent, move into a granny flat arrangement, retirement village, or aged care facility and still be eligible to make a downsizer contribution

Social Security Considerations

  • Your home is an exempt asset from Centrelink Age Pension Calculations
  • Where a home is sold to free up capital, any excess funds will be assessed for Age Pension Calculations, which could potentially negatively impact pension entitlements


Property owned by a spouse who is less 65 years old

David is aged 70 and Stephanie is aged 63. They live in a home which Stephanie purchased 20 years ago. Stephanie sells the home for $900,000 post 1 July 2018. The main residence exemption disregards all of Stephanie’s capital gain. David can make a downsizer contribution up to $300,000 within the 90 day period. Stephanie is not eligible to make a downsizer contribution as she is less than 65 years old.

Contributions limited to the lesser of the cap or to amount of sale proceeds

John and Sally, both in their 70s, have lived in their jointly-owned home for 30 years. On 1 August 2018, they sell their home for $550,000 and the settlement date is on 13 September 2018. The main residence exemption disregards all of their capital gain. John and Sally make downsizer contributions not exceeding $550,000, however they have discretion as to who receives that contribution (i.e. it does not need to be 50/50).

Ex-spouse period of ownership and partial main residence exemption

Steven divorced in 2017. As part of the divorce settlement, he received an investment property which was owned by his ex-wife Claire, since 2010. Steven lived in the property for two years and then rented it out until it sold for $600,000 in August 2021. Steven’s capital gain can be partially disregarded under the CGT main residence exemption. Claire’s period of ownership counts towards the ten year ownership period. At the time of the sale, Steven is 66 and is eligible to make downsizer contributions up to a total of $300,000

Also read Checklist – Are you on track for the retirement you deserve?

Disclaimer: * The information contained in this site is general and is not intended to serve as advice as your personal circumstances have not been considered. DPM Financial Services Group recommends you obtain personal advice concerning specific matters before making a decision.

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