Downsizer contributions: $300k into super after selling your home

The downsizer contribution rule lets eligible Australians aged 55 or over contribute up to $300,000 each ($600,000 per couple) into super from the proceeds of selling their main residence. It sits completely outside the normal concessional and non-concessional contribution caps, and it is not affected by the Total Super Balance (TSB) limit that blocks other large contributions. For older couples sitting on a high-value family home, it is one of the few remaining ways to get a substantial lump sum into super after age 75.

Eligibility — five tests, all must be met

• You (and your spouse, if contributing too) are 55 or older at the time the contribution is made. The age limit was 65 originally and has reduced over time.
• The property has been your main residence at some point during your ownership period, and either you or your spouse has owned it for at least 10 years before the sale.
• The sale qualifies for at least a partial CGT main residence exemption (or would have if the property were a post-CGT asset).
• You make the contribution within 90 days of receiving the sale proceeds — usually settlement date.
• You complete the ATO 'Downsizer contribution into super' form (NAT 75073) and provide it to the fund at or before the time of the contribution.

Key features

Downsizer contributions are unique. They do not count against your concessional or non-concessional caps. There is no upper age limit and no work test. Your TSB at 30 June of the prior year is irrelevant — even members with $5 million already in super can make the contribution. And it is a one-time-per-person opportunity: once you've used your $300,000 entitlement on a property sale, you cannot use it again on a later sale.

What it does count for

Although it bypasses the contribution caps, the amount is added to your TSB the moment it lands in the fund. That can push you over the $1.9 million Transfer Balance Cap if you intend to move the new money straight into pension phase, and it can affect future non-concessional cap eligibility for the receiving member. It can also impact Age Pension eligibility — once the money is in super (an assessed asset for over-pension-age members) it sits inside the assets and income tests.

Practical example

John and Helen, both 67, sell their long-time family home in Sydney for $2.1m. They each contribute $300,000 to their SMSF as downsizer contributions within 90 days of settlement, lodge the NAT 75073 forms, and the SMSF accepts the total of $600,000. The contributions do not use any of their normal cap room and are not blocked by their existing balances. Inside the SMSF, the money earns concessionally-taxed (15%) returns until they commence pensions.

Common mistakes

• Missing the 90-day deadline — there is no extension except in very narrow ATO discretion cases.
• Forgetting to lodge NAT 75073 before the contribution — the fund must reject it as a downsizer contribution if the form arrives late, and it may then breach the normal NCC cap.
• Assuming both spouses qualify — only spouses who personally meet the age and ownership tests can contribute. The property does not need to be in both names, but each contributor must be a spouse who's lived in it.
• Trying to use it twice across two property sales — the entitlement is once per person, ever.

Sources: Australian Taxation Office — Downsizing contributions into superannuation (ato.gov.au); Income Tax Assessment Act 1997 section 292-102; ATO Form NAT 75073.