The downsizer super contribution allows Australians aged 55 or older who sell their family home to contribute up to $300,000 per person (or $600,000 per couple) of the sale proceeds into superannuation — outside the normal contribution caps. In 2026, this remains one of the most powerful strategies for older Australians to build their retirement nest egg while reducing a large family home into a more manageable property. Here is everything you need to know.
What Is a Downsizer Contribution?
A downsizer contribution is an after-tax super contribution made from the proceeds of selling your main residence. Unlike regular non-concessional contributions, downsizer contributions:
- Do not count toward the non-concessional contributions cap ($120,000/year)
- Can be made regardless of your total super balance (even if above $1.9 million)
- Are available from age 55 (reduced from 65, then 60, now 55 as of 2023)
- Can be made even if you do not purchase a new home
- Count toward your total super balance for pension phase calculations
Eligibility Requirements in 2026
- You must be 55 years of age or older at the time of making the contribution
- The home sold must have been owned by you or your spouse for at least 10 years
- The home must be in Australia and be a dwelling (not vacant land)
- The home must have been your main residence at some time during the period of ownership (partial main residence use is sufficient)
- You must not have previously made a downsizer contribution from the sale of another home
- The contribution must be made within 90 days of settlement (or ATO-approved extension)
Tax Treatment of Downsizer Contributions
Downsizer contributions are treated as non-concessional (after-tax) contributions — they are made from after-tax proceeds and are not taxed on entry into the fund (unlike concessional contributions which are taxed at 15%). They are not tax-deductible. However, earnings within the super fund on these contributions are taxed at only 15% (or 0% in pension phase), making the growth significantly more tax-efficient than outside super.
How the Transfer Balance Cap Affects Downsizer Contributions
The 2026 transfer balance cap — the maximum amount you can move into the tax-free pension phase — is $1.9 million per person. If your super balance already exceeds or approaches $1.9 million, you can still make a downsizer contribution, but those funds must remain in accumulation phase (taxed at 15% on earnings) rather than pension phase. Financial advice is important before making large contributions close to the cap.
Frequently Asked Questions
What is the maximum downsizer contribution in 2026?
You can contribute up to $300,000 from the sale of your home as a downsizer contribution. For couples, both can make a contribution from the same sale — up to $300,000 each, or $600,000 combined — even if only one spouse was listed on the property title.
Do I have to buy a new home to use the downsizer contribution?
No. You can make a downsizer contribution and move into rental accommodation, aged care, or a family member's home. The contribution is available regardless of what you do after selling, as long as all other eligibility requirements are met.
Is a downsizer contribution tax-deductible?
No. Downsizer contributions are non-concessional and are made from after-tax money. They are not deductible. However, once inside super, the earnings on the contributed amount are taxed at only 15% — far lower than most retirees' marginal tax rate outside super.
Considering selling your family home and boosting your super? Contact AWTS for advice on downsizer contributions, pension phase caps, and superannuation strategy.
