Downsizing Your Home: A Financial and Property Checklist

Downsizing is a housing decision before it is a financial strategy. A smaller home may reduce work or release cash, but the outcome depends on two real transactions, ongoing housing costs, the way sale proceeds are used and any effect on tax, super or government payments.

Start with the home you need

ASIC Moneysmart's current downsizing guidance recommends weighing space, upkeep, location, services and the emotional effect of moving. A smaller dwelling is not automatically cheaper to own and may introduce owners corporation fees or different insurance and maintenance responsibilities.

Inspect the proposed home against likely needs, including:

• step-free access, bathroom layout and the ability to adapt the home;
• transport, health services, shops and support networks;
• room for visitors, a carer, work or hobbies;
• ongoing rates, insurance, energy, maintenance and scheme fees;
• what is included in the title, lease, licence or residence contract.

Build a transaction worksheet

Use quotes and official calculators to fill in four sections:

1. Net sale proceeds: expected sale price less mortgage payout, agent fee, marketing, legal work, agreed repairs and other sale costs.
2. Acquisition cost: purchase price plus current state duty, registration, legal work, inspections, moving and immediate work.
3. Transition cost: bridging interest, temporary accommodation, storage or duplicated ownership costs if the dates do not align.
4. Annual housing cost: rates, insurance, utilities, maintenance and any strata, land-lease or retirement-village charges.

Run more than one scenario. A lower sale price, higher purchase price or delayed settlement can materially change the result. Do not count a hoped-for sale price as cash available for the new purchase.

Downsizer contributions to super

A downsizer contribution is a specific super contribution, not a requirement to buy a smaller home. According to the ATO downsizer rules and ASIC Moneysmart's plain-English summary, an eligible person who is at least 55 when contributing may contribute up to $300,000. Each eligible spouse has an individual limit, but combined contributions cannot exceed the relevant sale proceeds.

Key conditions include:

• the home is in Australia and satisfies the relevant ownership and main-residence tests;
• the owner or their spouse held the home for at least 10 years;
• the contribution is generally made within 90 days after receiving the sale proceeds;
• the person has not previously made a downsizer contribution; and
• the approved form is given to the fund at or before the contribution.

Eligibility has details beyond this summary, including which spouse held the ownership interest and how the main-residence test is met. Confirm eligibility and timing with the ATO, the fund and a licensed adviser before settlement; do not wait until the 90-day period is nearly over.

Age Pension and government payments

The principal home is generally excluded from the social-security assets test, but money released from it may be treated differently. Services Australia says on its real-estate assets page that the portion of proceeds intended for a new principal home may be exempt from the assets test for up to 24 months for sales from 1 January 2023, with a possible further period of up to 12 months depending on the circumstances. Deeming and other conditions can still apply.

Moving money into super does not automatically preserve a payment. Services Australia's superannuation guidance says super is generally assessed under both the assets and income tests once a person reaches Age Pension age. Ask the Financial Information Service how the intended sale, purchase timing, retained cash and super contribution would be assessed before acting.

Main-residence CGT questions

The ATO says a home that qualifies as a person's main residence is generally exempt from CGT. A full exemption is not automatic in every case. Periods of rental use, income-producing use, land beyond the qualifying area, foreign-residency rules and having more than one home can change the result. Start with the ATO's main-residence guidance and give a registered tax agent the complete ownership and use history before signing a sale contract.

Retirement village contracts

A retirement-village unit may involve ownership, a long lease, a licence, shares or another right to occupy. Entry payments, recurring charges, departure fees, resale arrangements, reinstatement work and capital gain or loss sharing come from the contract and the law of the state or territory—not a national percentage.

For example, Consumer Affairs Victoria's retirement-village contract guidance explains Victorian rights and contract requirements, including 2026 reforms. Those provisions must not be applied to a village in another jurisdiction. Obtain the current local disclosure pack and ask an experienced lawyer and financial adviser to calculate what you would receive if you left after several different periods.

• What legal interest or right to occupy are you acquiring?
• Which entry, ongoing and departure amounts apply, and how can they change?
• How is the exit entitlement calculated and when must it be paid?
• Who pays for resale, renovation, reinstatement and vacancy-period charges?
• What happens if one partner dies, enters care or leaves before the other?

Plan the sale and purchase

Selling first provides price certainty but may create a temporary housing need. Buying first removes that gap but exposes the household to financing and sale-timing risk. Aligned settlements depend on both contracts and can still fail if one transaction is delayed. Bridging finance is a separate credit product, so compare its written term, rate, fees, repayment assumptions and sale deadline before relying on it.

Ask the conveyancer to map deposits, finance dates, settlement funds, insurance responsibility, occupation and a delay contingency for both contracts.

Use the moving-house checklist for practical handover tasks after the legal and financial plan is settled.

General information only, not financial, tax, social-security or legal advice. Reviewed 24 August 2026. Rules and contract terms change. Confirm your circumstances with the ATO, Services Australia, your super fund and appropriately licensed advisers before acting.