Downsizing and Taxes: What You Need to Know in NSW

For Australians aged 55 and over, downsizing can be an exciting step toward a simpler lifestyle. But along with the practical and emotional aspects of moving comes an important consideration: tax implications specifically for downsizers. Understanding the taxes, exemptions, and incentives available in New South Wales (NSW) can help you plan your downsizing journey confidently and make the most of financial opportunities.

1. Capital Gains Tax (CGT) – Main Residence Exemption

If you’re selling your family home to downsize, the main residence exemption usually means you won’t owe Capital Gains Tax (CGT):

• Full exemption applies if the property has been your main residence for the entire ownership period.
  
• Partial exemption may apply if parts of your home were ever rented out or used to generate income.
  

Tip: Keep records of any renovations or improvements, as they may impact your CGT if a portion of your property was income-producing.

2. Stamp Duty Concessions for Downsizers

Buying a smaller or more suitable property after downsizing may come with NSW stamp duty benefits:

• Standard stamp duty applies to all property purchases, but downsizers may qualify for transfer duty concessions depending on age and property type.
  
• Certain newly built properties may also offer reduced transfer duty for downsizers.
  

Tip: A qualified conveyancer can help ensure you receive all applicable concessions when purchasing your downsized home.

3. Downsizer Contributions to Superannuation

One of the biggest financial advantages for downsizers is the ability to make downsizer contributions into super:

• Homeowners aged 55 and over can contribute up to $300,000 per person ($600,000 per couple) from the sale of their home into superannuation, tax-free.
  
• The property must have been owned for 10 years or more and be your primary residence.
  
• Contributions do not count toward annual caps, allowing a significant boost to retirement savings.
  

Tip: Downsizer contributions can help reduce your taxable estate while strengthening retirement income.

4. Planning Ahead for Downsizer Tax Efficiency

Making smart decisions before selling and buying can help maximise financial benefits:

• Coordinate timing: Selling your current home and purchasing a smaller property strategically may reduce stamp duty and other costs.
  
• Seek professional advice: Tax advisers, accountants, or conveyancers experienced in downsizing can help you navigate exemptions and contributions.
  
• Consider super contributions early: Downsizer contributions are best planned before settlement to ensure smooth processing.
  
• Use a downsizing checklist: Our Checklist can help you stay organised and track key financial and practical steps during your move.
  
• Find the right property: Use Downsizer Ads to discover homes that match your goals and get early access to off-market opportunities.

Moving Forward with Confidence

Downsizing in NSW offers a simpler lifestyle and potential financial advantages, but understanding tax implications specific to downsizers is essential. By planning around CGT exemptions, stamp duty concessions, and downsizer contributions to super, you can make informed decisions and move confidently into your next home.

🔹 Learn more about downsizing with iDownsize

Disclaimer

These resources provide authoritative information to assist you in navigating the tax implications of downsizing in NSW. It’s recommended to consult with a tax advisor or financial planner to understand how these rules apply to your specific circumstances.

References

• Australian Taxation Office (ATO) – Eligibility for main residence exemption
• Australian Taxation Office (ATO) – Downsizer super contributions
• Revenue NSW – Stamp duty rates and concessions
• Revenue NSW – Land tax exemptions and principal place of residence