Downsizer Contribution: Rules and the Pension

The downsizer contribution lets you put money from selling your home into super once you’re 55, outside the usual caps. The ATO allows up to $300,000 for each eligible person, so a couple can add up to $600,000 between them, as long as the total isn’t more than the sale proceeds.

Despite the name, you don’t have to downsize. Moneysmart says the rules don’t require a smaller or cheaper home, or any home at all. You only have to sell one, have owned it long enough and meet the other conditions below.

Who can make one

The conditions are set out on the ATO’s downsizer page, last updated on 20 January 2026. You must be 55 or older when you contribute, and you or your spouse must have owned the home for 10 or more years before the sale. If only one of you owned it, the other can still contribute. The home has to be a residential building in Australia, not a caravan, houseboat or mobile home, and the sale has to qualify for the main residence capital gains tax exemption, fully or partly. A home bought before 20 September 1985, before capital gains tax existed, counts if it would have qualified.

It’s a one-off. Once you’ve made a downsizer contribution from one home, you can’t make another from a later sale.

The total can’t exceed the sale price. If a unit sells for $500,000, a couple can put in $500,000 between them, not $600,000. Each person’s $300,000 limit is their own, so one partner can’t use the other’s. Neither of you has to put in the full amount, either.

The age has come down twice. It was 65 when the rules started, then 60 during 2022 and 55 from 1 January 2023. There’s no upper age limit, which is what makes it useful after 75, when a fund can generally accept only compulsory employer contributions and downsizer ones.

A home you’ve rented out at some point can still qualify. The test is only that the sale gets the main residence exemption in full or in part, and the ATO lets you treat a former home as your main residence for up to 6 years while it’s rented. Past that, the exemption becomes partial, which still counts for the downsizer contribution. You’d pay capital gains tax on the taxable part of the gain, though.

The deadline and the form

Two steps trip people up. You have to give your fund the Downsizer contribution into super form (NAT 75073) before or at the time you contribute, and a form after the money has gone in is too late. If you pay it in several amounts, each one needs its own form. And the money has to go in within 90 days of receiving the sale proceeds, which usually means settlement, not exchange. Settlement dates move, so count from the day the money lands.

The ATO can extend the deadline if your circumstances warrant it, though not to help you meet the age requirement. Ask before the deadline, not after. Check with your fund first that it accepts downsizer contributions at all. If it doesn’t, the ATO’s advice is to open an account with one that does.

What it does to your caps and balance

A downsizer contribution doesn’t count towards the concessional or non-concessional caps. That’s the point of it. It can also be made when your total super balance is already above the level that would block other after-tax contributions.

It isn’t invisible, though. The ATO says it’s included in your total super balance at the end of the financial year, and it counts towards your transfer balance cap once the money moves into a retirement phase account, and as an after-tax contribution it can’t be claimed as a deduction.

The Age Pension catch

This is the part people miss. Your home is exempt from the Age Pension assets test, and money in super isn’t once you reach Age Pension age: Services Australia counts super in the assets test and deems it for the income test from that age. Moving $600,000 out of the home and into super can reduce your pension, or remove it. On a part pension, that can cost thousands of dollars a year.

Timing gives you some room. For a home sold from 1 January 2023, the share of the proceeds you’ll use to buy the next home is exempt from the assets test for up to 24 months, and up to 36 in some cases, and it’s deemed at the lower rate meanwhile. Under the current deeming rates, that’s 1.75% on the first $66,800 of a single person’s financial assets and 3.75% above it.

The ATO and Services Australia both suggest getting advice first. We’d agree.

A hypothetical on the North Shore

Here’s a hypothetical with invented details. A couple in their late sixties sell the West Pymble house they’ve owned for 25 years for $3,200,000, close to the 2073 median, and buy a $1,500,000 apartment. NSW transfer duty on the apartment is about $63,787 on our stamp duty calculator. They each contribute $300,000 within 90 days of settlement, and the rest of the proceeds stays outside super.

On paper, that’s $600,000 more in super. Whether it leaves them better off depends almost entirely on the pension and on what they’d have done with the money otherwise. If they’re self-funded, the extra money sits in a concessionally taxed account; if they’re on a part pension, it’s now counted against them.

Where the loan side comes in

Charlie’s clients usually meet this question from the other end. They want to buy the next place before the old one sells, and that’s a bridging loan, with interest running until the sale settles and a lower sale price than expected landing on you. The contribution deadline only starts running once the sale proceeds arrive, so a downsizer contribution doesn’t help with the bridge itself. If you put most of the proceeds into super, a lender may later be reluctant to lend against a smaller home without a clear way to repay.

If the aim is retirement income and you’d rather not move, selling isn’t the only route. The Home Equity Access Scheme lends against your home at 3.95% a year, compounding, and a reverse mortgage does something similar through a lender. Our reverse mortgage calculator shows how quickly either balance grows.

Our view, which plenty of super advisers will push back on: for a couple on a part pension, the downsizer contribution is often the wrong move, because it turns an exempt asset into a counted one. For a self-funded couple with no pension at stake, it’s one of the few ways left to get a large sum into super late. Before Age Pension age, super that isn’t paying a pension isn’t counted at all, so the timing matters as much as the amount. Plenty of couples sit somewhere between the two. That’s a judgement about your whole position, not the house sale alone.

What we can’t do is tell you whether to make the contribution. That’s a question for a licensed financial adviser, or a conversation with a Services Australia Financial Information Service officer. What Charlie can do is work out the loan side: the bridge, the size of the next mortgage if you need one, and how much of the sale you can leave untouched. If you’re selling and buying at the same time, start there.