But unlike super, owning a home doesn’t deliver an income in retirement. 

If you are worried about not having enough super income in retirement, downsizing to a smaller or better located home could be one solution. 

Recognising that helping older people move into smaller homes will free up larger homes for young families to enter the housing market, the Government lowered the eligibility age for downsizer contributions into super to 55 years or older from 1 January 2023. Back in 2018, the minimum age was 65. 

So aside from saying goodbye to all the maintenance issues that come with owning a large home, downsizing can be an attractive way to boost your super. Here’s what you need to know.

How downsizing works 

If you are 55 or older, you can put up to $300,000 from the sale of your home into superannuation as an after-tax (non-concessional) contribution. Couples can put in $600,000 combined provided they both meet the age requirements.

Importantly, downsizer contributions allow you to top up your super and access tax benefits, even if you’re otherwise ineligible to contribute.

Downsizer contributions do not count towards your annual contribution caps. They may be made in addition to any annual concessional and non-concessional contributions you may be eligible to make for the year. They do however count towards your transfer balance cap.

Who is eligible to make a downsizer contribution? 

Here’s a look at some of the eligibility requirements you must meet to make a downsizer contribution into your super:

• You must be 55 years old or older 
• You must make the downsizer contribution within 90 days of receiving the proceeds of the sale. (In some circumstances, you may be eligible to apply to the ATO for an extension of time.) 
• The house must be in Australia and cannot be a caravan, houseboat or mobile home. 
• You or your spouse must have owned the residence for more than ten years before the data or sale. 
• You have not previously made a downsizer contribution to your super from the sale of another home
• The contribution amount can’t be greater than the total sale proceeds from the sale of your home; for example, if your home sells for $500,000, that is the maximum amount that can be contributed for a couple.

To see a full list of eligibility criteria, visit the ATO website.

Impact on pension entitlements

It is important to weigh up the pros and cons of downsizing on any government entitlements before you sell your home. 

The downsizer contributions and the proceeds of your sale could reduce, or even eliminate your entitlement to an Age Pension, the Commonwealth Seniors Health Card or another form of government pension.

If you are considering making a downsizer contribution, you should seek professional advice as to how it may impact your current situation. 

How to make a downsizer contribution 

You must complete a Downsizer Contribution form for a contribution to be treated as a downsizer contribution. 

Next steps? 

As with any financial decision, you should look at your own personal situation before taking action. 

TelstraSuper Financial Planning has a team of phone-based Advisers who can provide advice about downsizer contributions. You can contact them on 1300 033 166 or fill in our online contact form. Fees may apply. 

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