What you need to know about the Downsizer Superannuation Contribution Scheme!

1 Jul 2018

From 1 July 2018, the Australian Federal Government introduced a new contribution cap - the downsizer contribution cap.

The scheme was announced as part of the 2017/2018 Federal Budget and has been designed for people downsizing their main residence to contribute funds into their superannuation fund.

Facts and conditions to consider:

  • The homeowner/s must be 65 years or more.
  • The contribution must be all or part of the capital proceeds received from the sale of an ownership interest in a dwelling in Australia, which is not a caravan, houseboat or other mobile home.
  • The homeowner or their spouse must have owned the property just before the disposal.
  • At least some of the capital gain must have been disregarded under the main residence CGT rules.
  • The contribution must be made within 90 days after the change of ownership occurs.
  • The homeowner, their spouse or former spouse must have owned an interest in the property for the 10 years prior to the sale.
  • The homeowners can only make one downsizer contribution per person.
  • One homeowner can contribute up to $300,000 from the sale of their property and a couple can contribute up to $600,000.
  • Homeowners can still take advantage of the scheme even if they don't make any subsequent home purchase.

Example One:

Gerrald and Louise have just sold their family home for $2M. They are both aged over 65 and have owned their home from 20 years. The entire capital gain is tax-free as their main residence. They are buying into an aged care facility, using $1M of the sale proceeds to fund the purchase. They can each put $300,000 into superannuation within 90 days of settlement of the sale using the downsizer contribution cap.

Example Two: more complex example

Emma sells a property that has been rented out by her for the last nine years. After she split from her first husband 12 years ago, she lived in the property for the next three years and so the capital gain qualifies as partly exempt from CGT under the main residence rules. The sale proceeds are $900,000. Emma can contribute $300,000 into superannuation using the downsizer contribution cap for herself, and also for her current spouse, Bill. Bill has never lived in the property (both are aged over 65).

In both examples, it does not matter how much they already have in superannuation, or whether they are gainfully employed at all.


Want more information about the downsizer contributions scheme?

Visit the ATO website here 



Note: The downsizing and super contributions proposal was announced as part of the 2017/2018 Federal Budget (May 2017 Budget). The proposal became law on 13 December 2017.

Cooper Grace Ward Lawyers provided the examples at https://www.cgw.com.au/publication/downsizer-contributions-need-know-new-contribution-cap/


Disclaimer: It is not intended that the information and opinions in this article be treated as advice professional or otherwise. Kevin Walter and Walter & Irvine Real Estate do not accept any form of liability from the contents of this article. It is recommended that professional independent advice is sought in relation to buying or selling real estate or superannuation contributions.