Australian homeowners approaching retirement could have an opportunity to put up to $1.38 million into superannuation as a couple by combining two contribution rules. The strategy is attracting growing interest among older Australians who are selling their family homes and looking for tax-effective ways to manage their retirement savings.
The key is the downsizer contribution scheme, introduced in July 2018, which allows eligible homeowners aged 55 and over to contribute up to $300,000 each from the proceeds of selling a qualifying property.
Recent figures from Colonial First State (CFS) suggest more Australians are discovering how this option can strengthen their financial position after retirement.
$300,000 Rule
The downsizer contribution scheme gives eligible Australians a way to move money from residential property into superannuation without using their standard contribution caps.
An individual can contribute up to $300,000, while an eligible couple can contribute a combined $600,000.
Both partners may qualify even when only one spouse legally owns the property, provided the relevant conditions are satisfied.
Unlike ordinary super contributions, downsizer payments have no upper age restriction, employment requirement or total super balance limit.
However, the contribution cannot exceed the eligible proceeds from the property sale.
This flexibility makes the scheme particularly useful for retirees who have accumulated substantial wealth in their homes but have relatively limited superannuation savings.
$1.38 Million Boost
The potential benefit becomes significantly larger when downsizer contributions are combined with ordinary after-tax super payments.
Under the contribution limits outlined for 2026–27, eligible Australians may be able to use the three-year bring-forward arrangement to contribute $390,000 in non-concessional contributions.
Adding a $300,000 downsizer contribution increases the possible amount to $690,000 per person.
For a couple, the combined figure reaches $1.38 million.
However, access to the full bring-forward amount depends on age, total super balance and other eligibility conditions.
The article’s stated $1.84 million balance threshold is particularly important for anyone considering the maximum non-concessional contribution.
The $1.38 million figure is a potential contribution amount, not a government payment, guaranteed investment return or automatic cash windfall.
Who Qualifies?
Homeowners must satisfy several Australian Taxation Office requirements before making a downsizer contribution.
The property generally must have been owned by the individual or their spouse for at least 10 years before the sale.
The home must also qualify for a full or partial main residence capital gains tax exemption, or would qualify but for certain exceptions.
Importantly, the property does not necessarily need to be the owner’s principal residence immediately before it is sold.
A former family home that later became a rental property may still qualify, depending on its ownership and occupancy history.
Eligible contributions generally must be made within 90 days of receiving the sale proceeds, usually settlement.
Contributors must also provide their super fund with the required downsizer contribution form before or when making the payment.
Demand Is Rising
Colonial First State has reported a notable increase in Australians using the downsizer scheme.
According to figures shared with Yahoo Finance Australia, the number of CFS members making downsizer contributions rose 22% during the 2025–26 financial year.
The total value contributed increased by 23% over the same period.
While financial advisers remain heavily involved in these transactions, contributions made directly by members reportedly jumped 46%, although from a smaller starting point.
The figures suggest awareness of the scheme is expanding beyond Australians receiving professional financial advice.
Australian Taxation Office figures cited in the report also show the scheme’s growing popularity.
Annual downsizer contributions increased from approximately $1.55 billion in 2018–19 to $5.37 billion in 2024–25.
Contributions reportedly remained above $5 billion in 2025–26.
Tax Advantages
One reason the scheme appeals to retirees is the favourable tax treatment available within Australia’s superannuation system.
Investment earnings in the accumulation phase are generally taxed at a maximum rate of 15%, while eligible retirement-phase pension accounts can receive tax-free investment earnings, subject to applicable limits.
Downsizer contributions themselves are generally treated as non-concessional contributions and are not taxed when entering super.
However, they do not automatically become a tax-free retirement pension account.
The transfer balance cap and other superannuation rules still determine how much can move into the tax-free retirement phase.
For homeowners with substantial property wealth, this distinction can make a significant difference to long-term retirement planning.
Pension Warning
Despite the advantages, selling the family home can create financial complications for Australians receiving the Age Pension.
An eligible principal residence is generally excluded from Centrelink’s assets test.
However, money released through a property sale may become assessable when invested, including in superannuation once the relevant assessment rules apply.
This means downsizing could reduce Age Pension payments or affect eligibility altogether.
The consequences depend on a person’s age, relationship status, assets, income and circumstances following the sale.
Homeowners must also consider property transaction costs, moving expenses and the price of their replacement residence.
A large contribution to super may not be beneficial if it leaves insufficient accessible money for everyday expenses.
What Comes Next?
Growing interest in voluntary super contributions suggests Australians are paying closer attention to retirement tax planning.
Colonial First State reported a 28.7% year-on-year increase in additional contributions during the first two months of the 2026–27 financial year.
The trend comes amid wider discussion about investment taxation and the relative benefits of holding assets inside superannuation.
For Australians aged 55 and over, the downsizer scheme offers a valuable opportunity to reconsider how housing wealth supports retirement.
However, the maximum $1.38 million strategy requires substantial available funds and eligibility for both contribution arrangements.
Before selling a property or transferring large amounts into super, homeowners should check current ATO limits, Centrelink implications and their individual financial circumstances.
The biggest benefit is not simply contributing more money. It is ensuring that the wealth built through decades of homeownership can provide sustainable income throughout retirement.
