Who is eligible to make a downsizer contribution to superannuation in Australia in 2026?

To be eligible to make a downsizer contribution in Australia in 2026, you must meet all of the following criteria: you must be aged 55 or over at the time of making the contribution (the age threshold was reduced from 60 to 55 on 1 January 2023); the property sold must be your principal place of residence in Australia (or a former principal residence); you or your spouse must have owned the property for at least 10 years prior to the sale; the property must be eligible for the main residence Capital Gains Tax (CGT) exemption (either fully or partially); you must make the contribution within 90 days of settlement of the property sale (or within 90 days of settlement of your share if the property sold in stages); and you must provide your super fund with a valid Downsizer Contribution form (ATO form NAT 75073) at or before the time of making the contribution. Importantly, you do not need to actually 'downsize' to a smaller home; you can rent, move into aged care, or even buy a larger property. You also don't need to be retired.

How much can Australian couples contribute as a downsizer contribution in 2026?

In Australia in 2026, each eligible person can contribute up to $300,000 as a downsizer contribution from the proceeds of a qualifying home sale. For a couple who jointly own their home, this means up to $600,000 total can be contributed to superannuation ($300,000 per person). Both partners must individually meet the eligibility criteria, including the age requirement of 55 or over. The contribution does not need to equal the sale proceeds — you can contribute any amount up to $300,000. For example, if a couple sells their home for $1.4 million, they could each contribute $300,000 to their respective super funds ($600,000 total) and retain the remaining $800,000 outside super. Notably, the downsizer contribution does not count toward your concessional (before-tax) or non-concessional (after-tax) contribution caps, making it a genuinely additional contribution pathway. There is no Total Super Balance restriction on making a downsizer contribution, meaning even people with super balances exceeding $1.9 million (the transfer balance cap) can still make this contribution.

Does the downsizer contribution affect the Australian Age Pension in 2026?

Yes, the downsizer contribution can affect Age Pension eligibility in Australia in 2026, but in a complex way that depends on the individual's circumstances. Before the home is sold, the family home is exempt from both the Age Pension income test and assets test. Once the home is sold and proceeds are moved into superannuation, those funds become assessable assets under the Age Pension assets test, and the earnings are subject to the income test deeming rules (where financial assets are assumed to earn a deemed income regardless of actual earnings). This can reduce Age Pension entitlements or cause a person to lose pension eligibility entirely if the additional super assets push them over the threshold. However, for many Australians the trade-off is worthwhile: super in pension phase is tax-free (unlike bank accounts that generate assessable interest), and the long-term investment returns inside super often outweigh the pension reduction. Modelling this trade-off requires careful financial planning. The current Age Pension assets test thresholds for 2025-26 are $314,000 for a single homeowner and $470,000 for a couple (combined assets) to receive the full pension.

Can you make a downsizer contribution to an SMSF in Australia?

Yes, downsizer contributions can be made to a Self-Managed Super Fund (SMSF) in Australia in 2026, provided the SMSF is permitted to accept member contributions under the fund's trust deed and the member meets all eligibility criteria. The trustee of the SMSF must ensure the fund can accept the contribution (for example, some trust deeds restrict contribution types or amounts) and correctly classify it as a downsizer contribution in the fund's records, not as a concessional or non-concessional contribution. The 15% contributions tax that normally applies to concessional contributions does not apply to downsizer contributions, as they are made from after-tax proceeds of a home sale. If the SMSF member has already started a pension account, the downsizer contribution can increase the accumulation account balance, which may then be used to start or increase a pension, subject to the transfer balance cap ($1.9 million in 2025-26, increasing to $2.1 million from 1 July 2026).

What are the main risks or downsides of the Australian downsizer contribution?

The main risks and downsides of the downsizer contribution in Australia in 2026 include: the Age Pension impact (home sale proceeds moved into super become assessable, potentially reducing pension entitlements significantly); the loss of the CGT main residence exemption doesn't apply to the contribution itself, but if a portion of the home was used for income-producing purposes, the CGT exemption may be partial; once the money is in superannuation, it is subject to super preservation rules (you generally cannot access it until a condition of release such as reaching preservation age, now 60, or retiring); if you subsequently enter aged care, super assets are assessed in the aged care means test and could increase your means-tested care fees; and if you make the contribution but then exceed the Total Super Balance threshold for non-concessional contributions, that's fine (downsizer contributions are exempt), but it's worth understanding your total super position before contributing. A common mistake is failing to provide the required Downsizer Contribution form (NAT 75073) to the fund at or before the time of contribution — without this form, the fund must treat it as a regular contribution, which could exceed caps.

How does the Australian downsizer contribution interact with Division 296 tax from 1 July 2026?

From 1 July 2026, Australia's Division 296 tax applies an additional 15% tax on earnings corresponding to the portion of a member's total super balance exceeding $3 million. This means if a downsizer contribution pushes your total super balance above $3 million, the earnings on the portion above that threshold will face an effective tax rate of 30% (the usual 15% in accumulation, plus the new 15% Division 296 tax). For high-balance SMSF members, this is a significant planning consideration. If your super balance is already close to $3 million, making a $300,000 downsizer contribution could push you over the threshold. On the other hand, for members with balances well below $3 million, the downsizer contribution remains an excellent way to boost retirement savings without Division 296 concerns. Balances of $2 million or below before the contribution would typically not trigger Division 296 issues on a $300,000 addition. Anyone with a super balance above $2.5 million should model the Division 296 impact before making a downsizer contribution in 2026.

The Downsizer Contribution: How Older Australians Can Boost Super by Up to $300,000 from Their Home Sale

Turning Your Home Into a Superannuation Windfall

For many Australians approaching retirement, the family home is their largest single asset — often worth more than their superannuation balance. The challenge has always been that housing wealth and retirement savings exist in separate buckets, and it’s been difficult to move money from one to the other.

The downsizer contribution was designed to change that. Since it was introduced in 2018 (and then extended to younger Australians in 2023), it has allowed eligible homeowners to contribute up to $300,000 each (or $600,000 per couple) from the sale of their home directly into superannuation, completely outside the normal contribution caps.

In 2026, with property values near record highs — the national median house price crossed $1 million earlier this year according to CoreLogic — the amounts involved are substantial. For many older Australians, selling the family home after the kids have grown up could generate $800,000, $1 million, or more in proceeds. The ability to funnel a significant portion of that into the tax-advantaged super environment is a powerful retirement strategy.

This guide explains the eligibility rules, the mechanics of making the contribution, the tax and pension implications, and the key planning considerations you need to understand before proceeding.

What Is the Downsizer Contribution?

The downsizer contribution (formally a “downsizer contribution to superannuation” under section 292-102 of the Income Tax Assessment Act 1997) allows eligible Australians aged 55 and over to make a one-off super contribution of up to $300,000 from the sale proceeds of a qualifying property.

Key features that distinguish it from regular super contributions:

Feature	Downsizer Contribution	Regular Non-Concessional Contribution
Cap	$300,000 per person	$120,000 per year (or $360,000 under bring-forward rule)
Total Super Balance restriction	None	Not available if TSB ≥ $1.9 million
Counts toward NCC cap	No	Yes
Age limit	55+	Generally no upper limit but work test applies after 75
Tax on contribution	None (made from after-tax home sale proceeds)	None (NCC = after-tax)
Frequency	Once only (per property, and only the first one qualifies)	Annually (subject to caps)

The “once only” nature is important. You can only make a downsizer contribution from the sale of one property. If you sell your home, make a downsizer contribution, then later sell another former home, you cannot make a second downsizer contribution.

Eligibility: The Five Criteria

1. Age: 55 or Over

You must be aged 55 or over at the time of making the contribution (not at the time of signing the contract or settlement). This rule applies to each contributing person individually — if a couple co-owns the home, each must be 55+.

The age was reduced from 60 to 55 from 1 January 2023, significantly expanding the pool of eligible Australians.

2. The Property Must Be Your Principal Residence (or Former Principal Residence)

The property sold must be located in Australia and must have been:

Your principal place of residence at some point, or
Your spouse’s principal place of residence at some point

Importantly, it does not need to be your current home at the time of sale. People who have moved out but retained their former principal residence can still qualify, provided the other criteria are met.

Investment properties that were never a principal residence do not qualify. A holiday house or beach shack that was occasionally used but never a principal residence typically does not qualify.

3. Owned for 10 or More Years

You or your spouse must have owned the property for at least 10 years prior to the sale. The 10-year period is calculated from the date of settlement when you purchased the property to the date of settlement when you sell it.

Properties inherited and sold within less than 10 years of the original purchase can still qualify in some circumstances, as the ATO looks at the length of ownership by the deceased individual.

4. Eligible for the CGT Main Residence Exemption

The property must be eligible for the main residence capital gains tax (CGT) exemption. This doesn’t mean you have to receive the full exemption — a property that qualifies for a partial exemption (for example, because it was used partly for income-producing purposes or was rented for a period) still qualifies the homeowner to make a downsizer contribution.

Properties held in a company name, or in a discretionary family trust where no individual can claim the main residence exemption, typically do not qualify.

5. Within 90 Days of Settlement

The contribution must be made to your super fund within 90 days of settlement of the property sale. The 90-day clock starts from the actual settlement date, not from exchange of contracts.

The ATO can grant extensions in limited circumstances (for example, if delays are caused by processing issues with the super fund), but the 90-day rule is strictly enforced.

The Required Form: Don’t Skip This Step

One of the most common errors with downsizer contributions is failing to provide the required Downsizer Contribution into Superannuation form (ATO form NAT 75073) to the super fund.

This form must be provided to the fund at or before the time of making the contribution. If you send the money without the form (or send the form after the contribution), the fund is legally required to treat the contribution as a regular member contribution. This could result in it being counted against your non-concessional cap, potentially triggering an excess contribution.

The form is available from the ATO website and is also often available through your super fund or SMSF administrator.

For SMSF trustees, the form should be held in the fund’s records as evidence of the contribution type.

Tax Implications of the Downsizer Contribution

Inside Super

Downsizer contributions are made from after-tax home sale proceeds. Because they are not concessional (before-tax) contributions, they are not taxed when received by the super fund. The fund does not withhold the 15% contributions tax that applies to employer or salary sacrifice contributions.

Once inside the fund, the money is invested and any earnings are taxed at the super fund rate:

15% in accumulation phase
0% in pension phase (for balances within the transfer balance cap)

Capital Gains Tax on the Home Sale

The home sale itself may or may not attract capital gains tax depending on the main residence exemption. In most cases:

Principal residence: Fully CGT-exempt (no CGT on sale)
Partly income-producing: Partial CGT applies proportionally
Vacant land: No main residence exemption applies

If CGT is payable on the home sale, it is a separate issue from the downsizer contribution. The ATO does not require you to use CGT-free proceeds specifically for the downsizer contribution — any sale proceeds can be used.

Division 296 Tax (from 1 July 2026)

From 1 July 2026, the Division 296 tax applies an additional 15% tax on super fund earnings corresponding to balances above $3 million. This is especially relevant for high-wealth Australians making large downsizer contributions:

Total Super Balance Before Contribution	Effect of $300,000 Downsizer Contribution
$1.0 million	Increases to $1.3 million — no Div 296 impact
$2.5 million	Increases to $2.8 million — still under $3 million threshold
$2.8 million	Increases to $3.1 million — $100,000 now above threshold
$3.2 million	Increases to $3.5 million — $500,000 above threshold

For those already above or near the $3 million threshold, the downsizer contribution should be carefully modelled before proceeding.

The Pension and Age Pension Interaction

Superannuation Access (Preservation Rules)

Money contributed as a downsizer contribution is subject to the standard super preservation rules. You cannot access it until you reach your preservation age (currently 60 for anyone born from 1 July 1964) and meet a condition of release such as retirement.

If you are still working and not yet retired, the downsizer contribution is preserved in your super fund until you retire or turn 65. This is a meaningful constraint for people who sell their home expecting to access the super funds within a few years.

Impact on the Age Pension

This is where the downsizer contribution gets complicated. Under the Age Pension rules:

Before the home sale:

Family home: Fully exempt from both the Age Pension assets test and income test

After the home sale and downsizer contribution:

Super balance increased by $300,000 (or $600,000 for couple)
Super in accumulation phase: Assessable from Age Pension age under both assets and income tests (deeming applies)
Super in pension phase: Assessable under assets test; deemed income applies under income test

The threshold impact can be significant. For a couple, the full Age Pension cuts out when assets (excluding family home) exceed approximately $1,012,500 (2025-26 thresholds, for homeowners). A couple with $700,000 in assets who make a $600,000 downsizer contribution would potentially push their assessed assets above $1,012,500 and lose the full Age Pension.

However, the loss of pension income needs to be weighed against:

The super fund’s potential investment returns
The tax-free (in pension phase) treatment of super earnings
The ability to draw down super as a tax-free income stream (from age 60)

Example comparison:

Scenario	Outside Super	Inside Super (pension phase)
Investment amount	$300,000	$300,000
Assumed return	4.5% (term deposit)	7.0% (balanced fund)
Annual income	$13,500 (taxable)	$21,000 (tax-free)
Impact on Age Pension	Reduces pension via deeming	Reduces pension via assets/deeming
Net advantage of super	—	Higher return, tax-free income

For most Australians with sufficient super to support retirement, the downsizer contribution into a pension-phase account delivers substantially better net outcomes than holding the proceeds in bank accounts or term deposits.

Strategies to Maximise the Downsizer Contribution

Strategy 1: Start a New Pension Account

If you are eligible to start a pension account (you have reached preservation age and retired, or turned 65), the downsizer contribution can go into a new pension account or increase an existing one, subject to the Transfer Balance Cap ($1.9 million in 2025-26, increasing to $2.1 million from 1 July 2026).

In pension phase, investment earnings are tax-free, and income withdrawals (from age 60) are tax-free. This is the most tax-advantaged position for retirement assets.

Strategy 2: Couple Optimisation — Splitting the Contribution

For couples, both partners making the maximum $300,000 contribution ($600,000 total) is ideal. But it’s also worth considering which fund receives the contributions to balance the couple’s total super balances, particularly if there is a significant gap.

For example, if one partner has $1.8 million in super and the other has $400,000, directing the majority of the downsizer contribution to the lower-balance partner creates a more balanced position and preserves more room for pension account contributions under the Transfer Balance Cap.

Strategy 3: Downsizer + Salary Sacrifice Combination

For those aged 55 to 67 who are still working, the downsizer contribution can be made alongside ongoing concessional contributions (salary sacrifice or personal deductible contributions). This allows accelerated super accumulation in the final working years.

A 58-year-old selling their home and still working five years from retirement could combine:

$300,000 downsizer contribution
$30,000 per year concessional contributions (FY2026-27 cap)
Carry-forward concessional contributions if applicable

Strategy 4: Time the Sale with Care

The 90-day window for making the contribution is non-negotiable. If you’re selling your home and planning a downsizer contribution, ensure your super fund (or SMSF administrator) is ready to receive the contribution promptly after settlement.

SMSF members should confirm with their administrator that the fund can process the contribution within the 90-day window and that the trust deed permits downsizer contributions.

Common Mistakes to Avoid

Mistake 1: Not providing the NAT 75073 form. As discussed, this form must accompany the contribution. Without it, the fund treats it as a regular contribution.

Mistake 2: Missing the 90-day window. Delays in organising the transfer mean missing the eligibility window. The ATO has limited discretion to extend.

Mistake 3: Using a property that never qualified as a principal residence. Investment properties that were never a principal home do not qualify, no matter how long they’ve been owned.

Mistake 4: Both partners not checking individual eligibility. Each partner must individually meet all criteria, including the age requirement.

Mistake 5: Ignoring the Division 296 impact for large balances. For members with super balances approaching $3 million, the additional tax cost of pushing above the threshold should be modelled carefully.

Mistake 6: Not reviewing the Age Pension impact. For current Age Pension recipients, a large increase in super assets can trigger significant pension reductions. The net financial impact should be assessed before making the contribution.

Is the Downsizer Contribution Right for You?

The downsizer contribution is genuinely one of the most powerful superannuation contribution strategies available to older Australians. The combination of no contribution caps, no Total Super Balance restriction, and entry into the tax-advantaged super environment makes it highly attractive.

But it’s not right for everyone. Key questions to work through:

Do you need access to the funds before retirement? If yes, having the money preserved in super may be a problem.
What is your current super balance? If you’re already close to the $3 million Division 296 threshold, the tax cost may change the calculus.
How will it affect your Age Pension? For current pension recipients, the impact can be significant and requires modelling.
What are you doing after the sale? If you’re renting or moving into aged care, the financial implications are different from downsizing to a smaller home.
Have you provided the correct paperwork? The form requirement is often overlooked.

These questions require individual financial planning, not generic online tools. A financial adviser or SMSF specialist who understands the intersection of superannuation law, Age Pension means testing, and CGT can work through the specific numbers for your situation.

Finding the Right Advice

The downsizer contribution strategy sits at the intersection of superannuation law, Age Pension rules, property transactions, and tax planning. It requires a financial adviser with genuine expertise across these areas — not just familiarity with basic super rules.

WealthWorks lists verified financial advisers and SMSF specialists across Australia who can help you work through the downsizer contribution decision, model the Age Pension impact, and ensure the contribution is made correctly and on time.

Find an SMSF specialist or financial adviser on WealthWorks

This article provides general information about Australia’s downsizer contribution rules and is not personal financial advice. Superannuation rules are complex and individual circumstances vary. We strongly recommend consulting a licensed financial adviser or SMSF specialist before making a downsizer contribution.