The downsizer contribution lets older Australians move a large amount of money from the sale of their home into superannuation, without being blocked by the usual contribution caps. It is one of the most generous super rules available, and it can be especially useful for people who reach retirement asset-rich but super-poor — that is, with plenty of home equity but a modest super balance.
This guide explains who is eligible, how much you can contribute, the strict timing rules, and how the downsizer contribution interacts with other limits. It sits under our overview of how superannuation works in Australia and pairs naturally with the contribution caps, which the downsizer sits outside.
What the Downsizer Contribution Is
When you sell your home, you can contribute up to $300,000 per person — so $600,000 for a couple — of the sale proceeds into super. Despite the name, you do not actually have to “downsize” to a smaller or cheaper home; you can move to a more expensive property, into a rental, or into aged care and still make the contribution. The label is about the policy’s intent, not a requirement.
The great advantage is that a downsizer contribution does not count towards your concessional or non-concessional contribution caps. This means you can use it even if you have already maxed out your other contributions, and even if your total super balance is above the level that would normally block after-tax contributions.
Who Is Eligible
To make a downsizer contribution you must meet all of the following:
- Age 55 or over at the time you make the contribution. There is no upper age limit.
- Ownership period: You (or your spouse) must have owned the home for at least 10 years before the sale.
- Main residence: The home must have qualified, at least in part, for the main residence CGT exemption. It generally must be in Australia and cannot be a caravan, houseboat, or mobile home.
- Timing: The contribution must be made within 90 days of receiving the sale proceeds (usually settlement).
- One home only: You can only use the downsizer contribution once in your lifetime, in relation to the sale of a single eligible home.
- Notify your fund: You must give your super fund the approved downsizer contribution form on or before making the contribution.
Because eligibility hinges on details like the ownership period and main-residence status, it is worth confirming your specific situation at ato.gov.au or with an adviser before selling.
How Much and From Whom
The $300,000 limit is per person, and it is capped at the total sale proceeds of the home. So if a couple sells a home for $500,000, they can contribute up to $500,000 in total between them — not $600,000 — because the contribution cannot exceed the sale price.
Importantly, a spouse can make a downsizer contribution even if they were not on the property title, provided the couple meets the ownership and other conditions. This lets couples move up to $600,000 into two super accounts from a single home sale, which can be a powerful way to build both balances at once.
Worked Example
Consider Margaret and Tom, both in their sixties, who sell the family home they have owned for 30 years for $900,000. Within 90 days of settlement, each completes the downsizer form and contributes $300,000 to their respective super accounts — $600,000 in total. Because these are downsizer contributions, they do not count towards either person’s contribution caps, and they can be made regardless of how much is already in their super. The remaining $300,000 from the sale stays available for their move to a smaller home and other needs.
How It Interacts With Other Rules
- Contribution caps: The downsizer sits entirely outside the concessional and non-concessional caps, so it does not use up your normal contribution room.
- Total super balance and the transfer balance cap: A downsizer contribution can be made even if your total super balance is high. However, moving the money into a tax-free retirement pension is still limited by the general transfer balance cap ($2.1 million for 2026–27, indexed). Amounts above that must stay in the accumulation phase, where earnings are taxed at up to 15%.
- Age Pension: Money moved from your home (an exempt asset) into super may become assessable under the Age Pension assets and income tests once it is in super or paying an income stream. This can reduce or remove your pension entitlement, so factor it into the decision.
- Other contributions: You can combine a downsizer contribution with other strategies such as salary sacrifice or spouse contributions, subject to their own caps.
Strategies and Considerations
- Boosting a low balance late. For people who own their home but have limited super, the downsizer is often the single largest contribution they can make.
- Couples evening up. Directing $300,000 to each partner can balance two accounts and make better use of each person’s transfer balance cap in retirement.
- Weigh the Age Pension trade-off. Shifting exempt home equity into assessable super can cost pension entitlement — sometimes the numbers favour keeping more equity in the home.
When the Downsizer Makes Most Sense
The downsizer contribution is not right for everyone, but it shines in a few situations:
- Asset-rich, super-poor retirees. People who have paid off a valuable home but have modest super can transform their retirement finances in a single move, shifting a large sum into the concessionally taxed super environment.
- Those who have already used their caps. Because it sits outside the contribution caps, the downsizer is often the only way to add a large amount to super late in life.
- Couples wanting to balance two accounts. Directing $300,000 to each partner can make fuller use of both transfer balance caps in retirement — a strategy that also underpins spouse contributions and splitting.
Where it makes less sense is if the move would sharply reduce your Age Pension entitlement, or if you may need the money accessible in the short term — remember super is preserved until you meet a condition of release.
The Tax Angle
Money moved into super via the downsizer contribution enters as a non-concessional amount, so there is no 15% contributions tax on the way in. Once inside super, earnings are taxed at up to 15% in the accumulation phase, or can be tax-free if the money supports a retirement pension within your transfer balance cap. For most retirees aged 60 and over who have met a condition of release, withdrawals are then tax-free.
Compared with leaving the sale proceeds in a bank account — where interest is taxed at your marginal rate — moving eligible amounts into super can be significantly more tax-effective, particularly for those with other taxable income. As always, weigh this against the Age Pension impact and your need for accessible cash.
Common Pitfalls
- Missing the 90-day window. The contribution must be made within 90 days of receiving the proceeds; late contributions are not eligible.
- Skipping the form. You must lodge the downsizer form with your fund on or before contributing, or the amount may be treated as a normal (capped) contribution.
- Assuming you can do it twice. It is a once-per-lifetime option.
- Overlooking the pension impact. The move can reduce Age Pension entitlements.
Used at the right time, the downsizer contribution can meaningfully lift the balance you carry into retirement — a key input to how much super you need to retire.
This article is general information only and not financial or tax advice; consider your own circumstances and speak to a licensed adviser or the ATO before acting.