A downsizer contribution is a contribution you can make to boost your super through the proceeds of the sale of your home.
Making the decision to downsize can be an emotional one, so it’s important to understand the implications.
How does a downsizer contribution work?
Here’s how a downsizer contribution works:
- Up to $300,000 per spouse can be contributed to your super from the proceeds of the sale of your home if you meet the eligibility criteria.
- A contribution amount cannot be greater than the total proceeds from the sale of your home.
- A downsizer contribution is not taxed when it is contributed to the fund.
- You cannot claim an income tax deduction on a downsizer contribution.
- A downsizer contribution can be made even if you have exceeded your contributions cap and it will count towards your personal transfer balance cap if you use your super to open a retirement phase income stream (like our Flexi Pension or Lifetime Income account).
A closer look at making a downsizer contribution
A couple sell their home for $500,000. Therefore, the maximum contribution they can make is $500,000 in total. However, as the maximum one individual can contribute into their super is $300,000, they will have to choose if this $500,000 is halved ($250,000 per person) or split $300,000 and $200,000.
Generally, you need to make your contribution within 90 days of settlement. The ATO may give an extension under certain circumstances.
Downsizer contribution eligibility criteria
You can generally make a downsizer contribution if you meet the following eligibility criteria:
- are aged 55 or over,
- have owned your home for at least 10 years,
- haven’t already made a downsizer contribution from the sale of another home.
See the ATO website for the full list of eligibility criteria.
Make a downsizer contribution in 3 steps
Step 1:
Download and complete the ATO’s downsizer contribution form
Step 2:
Make a cheque payable to UniSuper Limited and write your UniSuper member number on the reverse side.
Step 3:
Mail your form and cheque to:
UniSuper
Level 1, 385 Bourke Street
Melbourne VIC 3000
Things you should know
If your downsizer contribution puts your total superannuation balance over $1.9 million, you generally won’t be able to make any non-concessional (after-tax) contributions in future financial years.
Your home is generally exempt from the Centrelink assets test, but super generally isn’t, which could affect any entitlements you receive. If you’re unsure, talk to retirement adviser.
Our Downsizer module provides an interactive way to help you understand more about making a downsizer contribution and is a great way to help you prepare for the sale of your home.
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The information is of a general nature and doesn't consider your personal circumstances. Before making decisions, you should consider whether the information is appropriate for your circumstances otherwise seek financial advice.