Downsizer Super Contributions: An Oversized Opportunity for over 55's
If you are 55 or older and thinking about selling your home, a downsizer super contribution might provide a once in a lifetime opportunity to boost your super.
Don’t let the name fool you. The Super Downsizer Contribution has nothing to do with buying a smaller home. It could be a way to substantially boost your retirement savings or even restructure your super for tax benefits.
What Are Super Downsizer Contributions?
The Super Downsizer scheme allows eligible Australians to contribute up to $300,000 from the proceeds of selling their primary residence directly into their superannuation. For couples, this means a potential combined injection of $600,000 into your retirement nest eggs.
What makes this opportunity particularly valuable is that these contributions don’t count toward your non-concessional contributions cap. This means you can still make your regular annual contributions of up to $120,000 in addition to your downsizer contribution.
Eligibility Requirements
To qualify for the Super Downsizer scheme, you must:
- Be aged 55 or older at the time of contribution
- Have owned your home for at least 10 years
- Ensure the property is in Australia and has been your main residence at some point
- Make the contribution within 90 days of settlement
- Limit your contribution to $300,000 per person (not exceeding the property’s value)
Benefits Beyond the Obvious
The Super Downsizer scheme offers several advantages that make it an attractive option for over 55s:
- Bypasses contribution restrictions: Your downsizer contribution isn’t affected by the $1.9 million Total Super Balance cap that typically limits non-concessional contributions.
- Tax planning opportunity: Downsizer contributions can be incorporated into a recontribution strategy to minimize potential death benefit taxes for your beneficiaries. If you are unfamiliar with this concept, our website contains several blog articles that explain it in detail. To optimise benefits for your adult children, make this a part of your retirement planning process.
- Benefits for over 75s: Unlike regular super contributions, you can make downsizer contributions even if you’re over 75.
If you’re considering downsizing, speak with a financial adviser to determine how this strategy could fit into your overall retirement plan and help maximise your superannuation benefits.
Lachlan Harvey CFP®
Authorised Representative (No 227293)
