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Downsizer Contributions for SMSFs

Downsizer contributions allow individuals aged 55 and over to make a one-off contribution to their superannuation fund from the proceeds of selling their primary residence.

 

This can be a great way to boost your retirement savings without being restricted by the contribution caps that apply to other types of contributions.


At HelloLedger, we assist SMSF trustees in managing downsizer contributions, ensuring they are correctly documented and ATO-compliant.

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What Is a Downsizer Contribution?

A downsizer contribution is a type of non-concessional contribution that allows eligible individuals to contribute up to $300,000 (or $600,000 per couple) to their SMSF from the sale of their family home.
 

 

  • Contributions are not counted toward your non-concessional contribution cap.

  • Contributions are available regardless of superannuation balance.

Eligibility Criteria for Downsizer Contributions

To make a downsizer contribution, you must:

  1. Be aged 55 or older at the time of making the contribution.

  2. Have owned the property for at least 10 years before the sale.

  3. The property must qualify as your main residence (wholly or partially) under CGT exemptions.

  4. Make the contribution within 90 days of receiving the sale proceeds (settlement date).

  5. Complete and submit the Downsizer Contribution Form to your super fund before or at the time of making the contribution.

Key Benefits of Downsizer Contributions

  1. Boost Your Super Balance
    Downsizer contributions allow you to increase your super balance without being restricted by the non-concessional contribution cap or the total superannuation balance cap.
     

  2. No Work Test or Age Restrictions
    Unlike other contributions, downsizer contributions do not require you to meet a work test, making them ideal for retirees.
     

  3. Couples Can Contribute Up to $600,000
    Both members of a couple can make individual contributions of up to $300,000 each, even if the home was owned by only one spouse.
     

  4. No Requirement to Buy a New Home
    You are not required to purchase a new home after selling your property—you can rent or downsize to a smaller property without affecting your eligibility.

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Important Considerations

  1. Tax Treatment:
    Downsizer contributions are not tax-deductible and are treated as part of your taxable super balance, potentially affecting your transfer balance cap when starting a pension account.

  2. Impact on Age Pension:
    Downsizer contributions count towards the assets test for the Age Pension, which may reduce your eligibility for government benefits.

  3. Documentation Requirements:
    Trustees must document contributions and submit the required ATO forms to ensure compliance.

 

At HelloLedger, we assist with tracking contributions, record-keeping, and reporting requirements to make the process simple and compliant.

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Downsizer Contributions

FAQs

  • What is the maximum downsizer contribution I can make?

  • You can contribute up to $300,000 per individual or $600,000 per couple from the sale of your primary residence.

  • Does my super balance affect my eligibility?

     

  • No, you can make a downsizer contribution even if your total superannuation balance exceeds the $1.9 million transfer balance cap. However confirm any impacts if considering making other concessional or non-concessional contributions afterwards.

Do I have to downsize to a smaller home?

No, you don’t have to purchase another property or downsize—you can rent, relocate, or keep the proceeds as savings.

Will a downsizer contribution affect my Age Pension eligibility?

Possibly. Downsizer contributions count towards the assets test for the Age Pension, which may affect your eligibility or payment rates.

  • Can I make multiple downsizer contributions?

  • No, downsizer contributions are a one-off opportunity and cannot be made multiple times from the proceeds of different property sales.

  • .

What if I miss the 90-day contribution deadline?

You may apply for an extension in special circumstances, but extensions are not guaranteed. It’s important to plan ahead and make contributions within 90 days of settlement.

  • Can I withdraw downsizer contributions?

  •  

  • Yes, you can access downsizer contributions once you meet a condition of release, such as retirement or reaching preservation age, therefore as a retirement income stream or lump sum payment.

Get in Touch

Ready to take control of your retirement savings with a Self Managed Super Fund? 

Contact HelloLedger today for expert SMSF services. Together, we’ll pave the way for a secure and prosperous retirement. Say Hello to strategic superannuation management and Goodbye to worry!

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