One of the hidden secrets of quickly increasing superannuation accounts is really starting to get some traction.
Figures released by major industry fund HESTA show that the use of downsizer contributions to beef up superannuation balances increased a lot in 2025.
Helped by a surge in the end of year property spring selling season, HESTA members using downsizer contributions rose to $94 million in the year, a jump of more than 8% compared to the previous year.
Momentum still seems to be on the increase with 24% surge in December alone as proceeds from those spring sales started to flow through to member super accounts.
The HESTA numbers are likely to be matched across all of the large funds as people become more accustomed to some of the unusual rules around downsizer contributions and the opportunity this scheme presents that allow an individual to contribute up to $300,000 from the proceeds of selling a home.
The news gets even better for couples who can together contribute up to $600,000.
No Need to Actually Downsize to Qualify
One of the most common – and completely understandable - misconceptions about the downsizer contribution is that it can only be used when moving to a smaller home.
It may seem contrary to the very title of the concession but there is no requirement for the new home to be smaller than the one being sold.
You don’t actually even need to be downsizing to a cheaper home either.
That means that when you sell an eligible property, you can use funds other than from the property sale to make the actual downsizer contribution.
The basics of the downsizer contribution is that you must have owned your current residence for ten years or more, that the sale proceeds are more than $300,000, be aged 55 or more and that you have reached a condition of release for your super.
Generally, that means you have stopped working and are aged at least 55 or simply being over the age of 65.
Even Works for Those Long-Retired
Another unusual wrinkle that applies to the downsizer contribution is that it can apply even to those who have been retired a long time.
There are some important caveats though, with the maximum downsizer contribution limited so that it is no more than the total amount received from the sale of the home and that the home is located in Australia and is an actual building and not a caravan or boat.
Strict Time Limits Apply
Another important caveat is that the contribution also needs to be made within 90 days of receiving the money from the sale, so it is important to plan this aspect early to avoid problems.
Part of that preparation should include reading the downsizer contribution form and make sure the form is lodged with your super fund before or when you make the contribution.
Unlike many other forms of contribution, the downsizer one is not limited by any maximum age or limited by the amount you already have within super.
This makes it a particularly attractive way to substantially increase the amount you have within super – something that might take a lot longer if you were relying on conventional capped contributions.
In technical terms, a downsizer contribution is treated as a non-concessional (or non-tax-deductible) contribution, but it does not count towards either the concessional or non-concessional contribution caps.
That is important because it means other contributions won’t be stopped simply by making the one-off downsizer contribution.
House Must Have Been Lived in
Another important issue to note here is that the home being sold must be exempt or partially exempt from capital gains tax under the main residence exemption, which basically means one member of the couple has been living there.
Interestingly, the downsizer contribution is not restricted by the total amount you already have in super and is not counted against your transfer balance cap.
That means it is possible for a person to have more than the current $2 million transfer balance pension cap and still make a downsizer contribution, although pushing the super balance this high might not be advisable, depending on individual circumstances.
HESTA chief executive Debby Blakey said the rise in contributions reflected the increasing awareness and use of the downsizer scheme among eligible Australians looking to boost their retirement savings, which in turn could support a freeing up of critical housing stock.
Part of a Broader Strategy
"We're seeing more and more members using the downsizer contribution as part of their broader retirement strategy, helping them build stronger financial foundations for their future," Blakey said.
"The exceptional results this spring and the record annual total show us that members are increasingly aware of how they can use this policy to both unlock their housing equity and boost their super in a tax-effective way."
"This approach can have the added benefit of helping free up larger homes for growing families," she said, adding that this could also be a positive sign for cities struggling with the housing affordability challenge’’.
