Older Aussies can put up to $300,000 into their super using the money from the sale of their main residence, regardless of caps and restrictions that otherwise apply.
If you’re aged 65 or over and are looking to boost your retirement savings, you can make a tax-free contribution to your super of up to $300,000 using the proceeds from the sale of your main residence. Take a look at the potential advantages, rules and other things you’ll want to be aware of.
Benefits if you make a downsizer contribution
Downsizer contributions provide a way to top up your super balance
Older Aussies, who haven’t had the chance to save enough funds for retirement, may find that tax-free downsizer contributions provide a good opportunity to top up what they’ve saved to date.
No work test or age limits apply to downsizer contributions
Usually, people aged 67 to 74 need to satisfy a work test (where you have to work 40 hours over a period of no more than 30 consecutive days) to make voluntary super contributions, while people aged 75 and over are generally ineligible to make any voluntary contributions to their super.
Annual contributions caps also do not apply
Annual concessional and non-concessional contributions caps, which are $25,000 and $100,000 a year respectively (bearing in mind there may be instances where you can also carry forward any unused amounts from previous years), don’t apply to downsizer contributions. In fact, downsizer contributions can be made in addition to any concessional and non-concessional super contributions you may be eligible to make.
Downsizer contributions aren’t subject to the $1.6m total super balance restriction
While you can’t make non-concessional contributions into your super at all if your total super balance is $1.6 million or above as at 30 June of the previous financial year, this rule doesn’t apply to downsizer contributions.
There’s no requirement to buy a new home
If you sell your main residence and make a downsizer contribution into your super, you’re not required to buy a new home with money you might make on the sale.
Both members of a couple can take advantage
For couples, both spouses can make the most of the downsizer contribution opportunity, which means up to $600,000 per couple can be contributed toward super.
Rules and other considerations to be aware of
- You must be aged 65 or older to make a downsizer contribution
- The property that’s sold needs to have been your (or your spouse’s) main place of residence at some point in time, and you need to have owned the home for at least 10 years
- The sold property must be in Australia and excludes caravans, mobile homes and houseboats
- A downsizer contribution must be made within 90 days of receiving the sale proceeds
- A downsizer contribution form must be submitted to your super fund before, or at the time of making your contribution
- You can’t have previously made a downsizer contribution to super
- You can only transfer a maximum of $1.6 million in super savings (not including subsequent earnings) into a tax-free pension account
- Downsizing your home may impact Age Pension eligibility. There is no special Centrelink means test exemption for making downsizer contributions
- The costs involved in selling a property and buying another one (if that’s also on the agenda) can be considerable, so you’ll need to take into account any additional property-related costs
- Downsizer contributions are not tax deductible.
Where to go for more information
Depending on your situation, other rules may apply, so do your research and chat with your adviser about any possible implications. If you don’t have an adviser but would like some advice, you can call AMP on 131 267 or use our find an adviser search function.
For further insights, read about other ways you can contribute to your super.
Oliver’s Insights – Why growth in China is unlikely to slow too far and why it needs to save less and spend moreRead more
How much superannuation is enough?Read more
Why super and growth assets like shares really are long-term investmentsRead more
Oliver’s Insights – Bushfires and the Australian economyRead more
Oliver's InsightsRead more
What the RBA’s response to COVID-19 means for the Australian economyRead more
Products in the Super Directions Fund and the Wealth Personal Superannuation and Pension Fund are issued by N.M. Superannuation Proprietary Limited (N.M. Super) ABN 31 008 428 322 (trustee), which is part of the AMP group (AMP). Before deciding what’s right for you, it’s important to consider your particular circumstances and read the relevant Product Disclosure Statement or Terms and Conditions available from AMP at amp.com.au or by calling 131 267. Read AMP’s Financial Services Guide for information about our services, including the fees and other benefits that AMP companies and their representatives may receive in relation to products and services provided to you.
Products in the AMP Eligible Rollover Fund, National Mutual Retirement Fund, and NM Pro Super Fund are issued by Equity Trustees Superannuation Limited ABN 50 055 641 757 (trustee). Risk products are issued by AMP Life Limited ABN 84 079 300 379 (AMP Life), which is part of the Resolution Life group. AMP Life has proudly served customers in Australia since 1849. AMP Limited ABN 49 079 354 519 has sold AMP Life to the Resolution Life group whilst retaining a minority economic interest. AMP Limited has no day-to-day involvement in the management of AMP Life whose products and services are not affiliated with or guaranteed by AMP Limited. AMP Limited is not liable for products issued by AMP Life or any statements or representations made in the PDS for those products. “AMP”, “AMP Life” and any other AMP trademarks are used by AMP Life under licence from AMP Limited. Before deciding what’s right for you, it’s important to consider your particular circumstances and read the relevant Product Disclosure Statement or Terms and Conditions available from AMP Life at amp.com.au or by calling 133 731. Read AMP Life’s Financial Services Guide for information about our services, including the fees and other benefits that AMP Life and/or other companies within the Resolution Life group may receive in relation to products and services provided to you.
Any advice and information provided is general in nature, hasn’t taken your circumstances into account, and is provided by AWM Services Pty Ltd ABN 15 139 353 496 (AWM Services), which is part of the AMP group (AMP). All information on this website is subject to change without notice.