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We’re preparing your 2024/25 annual statement, with delivery starting from 11 September. It may take a few weeks to arrive by mail or online. You can update how we send it to you in Member Online.ÌýMore information on your annual statement.

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Q: Now that we’re empty nesters, my husband and I are thinking about selling the family home to move somewhere smaller. Can you please explain the benefit of a downsizer contribution, especially if the proceeds from the sale are already Capital Gains Tax free? We would love to know if there’s anything else we should be aware of as we make this decision. Ìý

A: Downsizer contributions, which allow Australians over 55 who sell their home to make a one-off contribution from the proceeds, are a potentially tax effective way to boost your retirement savings. It’s great to hear you’re putting plenty of thought into it, as this type of contribution can come with important considerations and potential pitfalls.ÌýÌý

One of the biggest advantages of a downsizer contribution is that it is an after-tax contribution. A downsizer contribution can be up to $300,000 per person or $600,000 for a couple if the proceeds exceed the contributed amount. This means no tax is paid on the money when you put it in to your super.

When you’re eligible to withdraw this money from your super in the future, it will be tax-free. By comparison, if you invested the sale proceeds outside of super, for example in a term deposit or shares, the interest or returns would likely be taxed at your personal marginal tax rate. By putting the money into super, you can take advantage of the fund’s lower concessional tax treatment.

The extra piece of good news is that it’s in addition to the other contribution caps and limits. Plus, there’s no upper age limit. This is especially valuable if you’re over 75, as most other types of voluntary contributions are restricted beyond that age.

It’s important to note that you won’t be able to make a downsizer contribution to your SASS account. You will need to open a super account with another super fund and make the downsizer contribution to that fund.

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It’s important to note that you won’t be able to make a downsizer contribution to your SASS account. You will need to open a super account with another super fund and make the downsizer contribution to that fund.

  • You must be aged 55 or over at the time of making the contribution.

  • The property must have been owned by you or your spouse for at least 10 years prior to the sale.

  • The proceeds must be from the sale of a home that is at least partially exempt from Capital Gains Tax under the main residence exemption (or would have been, if it was acquired before 1985).Ìý

  • The contribution must be made within 90 days of settlement.

  • You can only make a downsizer contribution once in your lifetime, even if you sell another qualifying home down the track.

Source: 91ºÚÁÏÌý

Contributions of $100,000 and $300,000 are based on a single female (females represent majority of Aware members), making a downsizer contribution at age 55 and retire at age 67.

Contributions of $600,000 are based on a couple (male and female), making a downsizer contribution at age 55 and retire at age 67. Each member will contribute $300,000 into their super.

Extra incomes are rounded to the nearest $1000 and are stated in today’s dollars deflated using Average Weekly Ordinary Time Earnings (AWOTE) of 3.5% p.a. in accumulation phase and CPI of 2.50% p.a. in pension phase.

The downsizer contribution is made at age 55 and invested in the Balanced option with an assumed rate of return of 6.45% net of all taxes and investment fees between the ages 55-67 (inclusive).

Starting from age 67 at retirement, the single and couple started an income stream which is invested in the Conservative Balanced (pension) option. The assumed return is 6.00% p.a net of all taxes and investment fees.

Starting from age 67 at retirement, the single and couple will both attempt to maximise their income until age 95. This means drawing down the maximum sustainable amount until the super balance is exhausted at age 95.

The female member has a starting salary of $85,000 and a starting balance of $156,000.

The male member has a starting salary of $108,000 and starting balance of $203,000.

We assume the gross salary will grow by age according to the age-based Salary Promotional Scale, as well as by time according to the Expected Salary Growth Rate of 3.5% p.a. We apply a gender-neutral age-based Salary Promotional Scale in the projection.

We estimate the Government Age Pension entitlement available to the individual based on their age, income and assets including the estimated super balance at age 67 according to the legislated rules. We have assumed the individual is a homeowner and has $50,000 in personal assets at retirement. Age pension and asset and income test thresholds are valid as at 1st February 2025.

An asset-based fee of 0.15% p.a., capped at a maximum of $750 p.a. and a fixed fee of $52 p.a. is applied in accumulation phase and an asset-based fee of 0.23% p.a., capped at a maximum of $1500 p.a. and a fixed fee of $52 p.a. Is applied in pension phase (91ºÚÁÏ administration fees are extracted from the PDS from 1 Oct 2024. Please refer to the PDS for more information).

Projection is valid based on the information available as at February 2025.

This example is for illustrative purposes only. It relies on various assumptions. If actual circumstances differ from these assumptions, actual results will be different.

A few things to note

The home does not need to have been your primary residence for the entire ownership period. And any existing mortgage or debt on the property doesn’t impact the amount you’re eligible to contribute: it’s the total sale proceeds that matter.

It’s important to know that the 90-day contribution window is strict, so you can plan ahead. Also, be mindful of how a large contribution could affect your Total Super Balance. A large contribution could push your balance over certain thresholds, which might limit your ability to make other types of contributions in future years.

You also need to consider how it could affect your Age Pension eligibility, if that’s part of your retirement plan. The family home is exempt from Centrelink’s assets test, but once sold, the proceeds can affect your entitlements. If you’re planning to buy another home, the proceeds may be exempt for up to two years, and will be subject to lower deeming rates in the meantime. Some couples also choose to contribute to the younger spouse’s super (if they’re under Age Pension age) to help reduce assessable assets.Ìý

If the sale of your home results in a Capital Gains Tax liability, you may want to explore other contribution strategies too. For example, a personal deductible contribution might help offset some of the tax payable, depending on your situation.

It’s also worth checking your super fund’s requirements carefully. If the correct form isn’t submitted or the contribution isn’t made exactly as required, it may be treated as a non-concessional contribution – which could lead to unexpected tax or penalties.

Finally, don’t forget to factor this decision into your estate plan. A large super contribution may change the way your assets are distributed, so it’s a good time to check your wills and beneficiary nominations, especially if you have a blended family or more complex arrangements in place.

A downsizer contribution can be a valuable way to make the most of your property sale, but it’s not a one-size-fits-all decision. A financial planner can help you weigh your options and make sure you’re taking the right steps for your future.Ìý

Where to next?

Ask an Expert: Ask an Expert: Making additional super contributions using the bring forward rule

Understanding the emotional journey of retirement

How is SASS taxed, and what changes when you exit?

How ‘flextirement’ is reshaping how we retire

Market review and outlook

Back to Edition 21

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Next steps for deferred members

If you’re a SASS deferred member, knowing your options can help you make sure you have the funds to suit your retirement lifestyle.

General advice only. Consider your objectives, financial situation or needs, which have not been accounted for in this information and read the relevant PDS and TMD before deciding to acquire, or continue to hold, any financial product. Advice provided by Aware Financial Services Australia Limited (ABN 86 003 742 756, AFSL 238430), wholly owned by 91ºÚÁÏ. You should read the Financial Services Guide, before deciding about our financial planning services. Issued by 91ºÚÁÏ Pty Ltd (ABN 11 118 202 672, AFSL 293340), trustee of 91ºÚÁÏ (ABN 53 226 460 365)