Downsizing in 2026: the incentives that actually exist now

Back in 2017 we wrote about a couple of budget proposals meant to make downsizing less painful: a stamp duty break for older buyers, and a way to put some of the sale money into super without it wrecking your Age Pension. At the time they were ideas. Nearly a decade on, most of them exist, and one of them turned out more generous than promised.

So if the family home has started to feel like more house than you need, and the thing stopping you is the money side, this is where the downsizing incentives actually sit in 2026. Some of it is genuinely good news. Some of it depends on which state you live in. And one common assumption about super and the pension is simply wrong, so we’ll clear that up too.

The downsizer super contribution

This is the big one, and it’s the 2017 idea that grew. The proposal was to let you quarantine $250,000 of sale proceeds in super. What became law lets you put in up to $300,000 per person, or $600,000 for a couple, from the sale of your home, on top of the usual contribution limits. The age limit started at 65, dropped to 60, and since 2023 has been 55.

To qualify, according to the ATO’s downsizer contribution rules:

You’re 55 or older when you make the contribution. There’s no upper age limit and no work test.
You or your spouse owned the home for at least 10 years.
The home was your main residence at some point, so the sale is at least partly covered by the main residence exemption from capital gains tax.
You make the contribution within 90 days of settlement, and give your fund the ATO’s downsizer contribution form before or with the money.
You haven’t made a downsizer contribution from a previous home. It’s once per person, per lifetime.

The contribution doesn’t count towards your concessional or non-concessional caps, and because it’s made from after-tax money, no contributions tax comes out of it. You also don’t have to buy a smaller place, or any place at all. Despite the name, you can sell up and rent, or move in with family, and still use it.

Two things to keep an eye on. The money counts towards your total super balance, which can affect other super rules, and if you later move it into a pension account it counts against your transfer balance cap. Neither is a reason not to do it, but they’re worth a conversation with your fund or an adviser before settlement, not after.

What selling your home does to your Age Pension

Your home isn’t counted in the Age Pension assets test. The money you get for it is. So the worry is real: sell a $900,000 house, buy a $600,000 unit, and $300,000 that used to be invisible to Centrelink is suddenly sitting in your bank account.

The rules give you breathing room here. Under Services Australia’s current rules, the part of the sale proceeds you intend to use to buy, build or renovate your next home is exempt from the assets test for up to 24 months, and that can stretch to 36 months if you strike delays outside your control. During that time the money still counts under the income test through deeming, but at the lower deeming rate, which softens the effect.

Plenty of retirees believe that moving the leftover money into super, via the downsizer contribution, keeps it away from the assets test. If you’re under Age Pension age, that’s true: super in the accumulation phase isn’t counted until you reach pension age. If you’re already of pension age, it isn’t. Once you’re there, super is assessed like any other financial asset, whether it’s sitting in accumulation or paying you a pension. For most downsizers, then, the downsizer contribution is a tax move, not a pension-protection move. It can still be a very good tax move. It just doesn’t do what the 2017 headlines implied.

Before you sign anything, ring Services Australia’s Financial Information Service. It’s free, it’s independent, and it exists for exactly this decision.

Do you pay capital gains tax when you downsize?

Usually not. If the place you’re selling has been your main residence for the whole time you’ve owned it, the sale is normally exempt from CGT. If it was rented out for a stretch, part of the gain may be taxable, and the rules for that are covered in our guide to selling an investment property. Either way, a registered tax agent can tell you where you stand in about ten minutes.

One thing every seller needs regardless: an ATO clearance certificate, or the buyer must withhold 15% of the price at settlement. It’s free and takes up to 28 days, so apply the week you decide to sell. Our guide to foreign resident capital gains withholding explains why it applies to Australians too.

Stamp duty when you downsize: state by state

Here the 2017 promise only half arrived. There’s still no national stamp duty exemption for older buyers. What you get depends entirely on where you’re buying, and the map has changed a lot in the last 18 months.

State or territory	What’s on offer in 2026
Victoria	Eligible pensioner and concession card holders pay no duty on a home up to $600,000, and a reduced amount between $600,001 and $750,000. One-off, and you must live in the home.
ACT	Eligible pensioners pay no duty at all from 1 July 2026, with no limit on the property’s value.
South Australia	New from 25 March 2026: buyers aged 60 and over who downsize into a newly built home, an off-the-plan apartment, or land to build on pay no duty. You must sell your existing home within 12 months either side of settlement. Established homes aren’t covered. The government puts the saving at up to $103,830 on a higher-priced purchase.
Tasmania	The 50% pensioner downsizing concession expired on 30 June 2025 and has not been renewed. Nothing downsizer-specific is currently available.
NSW, Queensland, WA, NT	No pensioner or downsizer concession. Queensland’s general home concession and WA’s off-the-plan rebate apply to anyone buying a home to live in, so check whether you qualify for those.

Two practical points fall out of that table. If you’re in South Australia and open to a new build, the timing and the type of property you buy now matter a great deal. And if you’re in New South Wales, the state with the loudest calls for a downsizer concession, you’re still paying full duty in 2026, so it goes into the sums like any other cost.

The costs that don’t come with an incentive

Stamp duty gets the attention because it’s a single, visible number. The cost that usually does more damage to a downsizer’s sums is the one on the way out: agent commission on the family home. On a $900,000 sale, a 2.2% commission is $19,800, and that comes off the top before any of the incentives above get a look in.

It’s also one of the few costs of downsizing you actually control. Selling the home yourself, with the listing on realestate.com.au and Domain for a flat $979 through PropertyNow, keeps that commission in your pocket, and for someone about to live on the proceeds that’s a meaningful amount. If you’d like to see the number for your own place, the commission calculator does the sum, and our guide to selling privately walks through how it works, including the licensed team on the phone seven days a week if you get stuck.

Beyond that, budget for the unglamorous bits: removalists, a conveyancer at both ends, and any work the new place needs. And give yourself permission to take your time. Selling the family home is an emotional decision as much as a financial one, and the incentives aren’t going anywhere in the next few weeks.

The bottom line

The 2017 proposals mostly came true. The downsizer super contribution is real, generous and open to anyone 55 or over. The Age Pension rules give you two years, sometimes three, to sort out your next home before the sale money counts against you. Stamp duty relief exists, but only in Victoria, the ACT and, for new builds, South Australia.

Get the current numbers for your own situation from the Financial Information Service and a tax agent, work out what the family home is worth today, and keep as much of the sale price as you can. The rest is just moving house.

Thinking about downsizing?

The incentives only make sense once you know what the family home would fetch today. Start with a free property value report and do the sums from a current number.

Get your free property value report

Frequently asked questions

How much can I put into super from the sale of my home?

Up to $300,000 per person, or $600,000 for a couple, as a downsizer contribution, as long as you’re 55 or over, owned the home for at least 10 years, and contribute within 90 days of settlement. It sits outside the normal contribution caps and can only be used once.

Do I have to buy a smaller home to make a downsizer contribution?

No. Despite the name, there’s no requirement to buy another home at all. You can sell, rent, or move in with family and still make the contribution, provided you meet the other conditions.

Will selling my home affect my Age Pension?

The part of the proceeds you plan to spend on your next home is exempt from the assets test for up to 24 months, extendable to 36 in some cases, though it’s deemed under the income test at the lower rate. Any money left over after you buy is assessed as a normal financial asset. Services Australia’s free Financial Information Service can walk you through your own numbers.

Does putting the money into super protect my pension?

Only if you’re under Age Pension age. Once you reach pension age, super is counted in the assets test like any other financial asset. The downsizer contribution is mainly a tax benefit rather than a way to shelter money from Centrelink.

Which states have stamp duty concessions for downsizers in 2026?

Victoria (pensioner concession up to $750,000), the ACT (no duty for eligible pensioners from 1 July 2026), and South Australia (no duty for over-60s buying a new build or off-the-plan from 25 March 2026). Tasmania’s concession expired in June 2025. NSW, Queensland, WA and the NT have no downsizer-specific relief.

Do I pay capital gains tax when I sell the family home to downsize?

Usually not, if it’s been your main residence the whole time you’ve owned it. If part of that time it was rented out, some of the gain may be taxable. A registered tax agent can confirm your position quickly.