Quick Q&A about downsizer super contributions

Are you in your sixties? Do you want to sell the family home? Would you like to put some of the sale proceeds into your super? If you answered yes to all three questions, then this Q&A is for you. 

What is a downsizer contribution?  

If you’re 65 years or older¹ you may be able to contribute up to $300,000 from the proceeds of the sale (or part sale) of your home into your super. It’s a great way to boost your super and to make the most of the tax benefits that come with super.  

What about the work test? 

The work test doesn’t apply to downsizer contributions. 

Does it count towards the transfer balance cap? 

Yes, it does. However, if you have already reached the $1.7 million transfer balance cap², your downsizer contribution, along with any other amounts above the cap, will be subject to 15% tax on investment earnings. 

Does it impact the Age Pension benefits? 

Yes, it does. As you may know, super isn’t exempt from the Age Pension test. This means any money you put into super, such as a downsizer contribution, could impact the assets and income tests aligned to the Age Pension.  

What about the sale of a second home? 

The downsizer contribution is a one-time offer, so you cannot use it again for the sale of a second home. 

Read more on the ATO website

1 From 1 July 2022, the age limit is 60 years or older. 

2 From 1 July 2017 to 30 June 2021, the transfer balance cap was $1.6 million. From 1 July 2021, it was increased to $1.7 million. 

 

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