Downsizing and the Age Pension: selling your home
Downsizing can change how your assets and income are assessed for Age Pension. Before selling, check the treatment of sale proceeds, any qualifying replacement-home exemption and what happens to money left in savings or contributed to super.
What changes when you downsize.
- Your principal home is generally exempt from the Age Pension assets test. Sale proceeds need a separate assessment, including how much you plan to put towards your next principal home.
- For a principal home sold on or after 1 January 2023, qualifying proceeds intended for buying, building, rebuilding, repairing or renovating a new principal home may be exempt from the assets test for up to 24 months from settlement. An extension of up to 12 months may apply if you still intend to use the proceeds, made reasonable efforts in a reasonable time and faced delays outside your control. Read the exemption conditions.
- You remain assessed as a homeowner during the qualifying sale-proceeds exemption, even if you rent temporarily. You may still qualify for Rent Assistance under separate rules. Check the Rent Assistance rules.
- An eligible person may be able to make a downsizer contribution to super, subject to the ATO conditions. This does not create a special Age Pension exemption: at Age Pension age, super is generally included in the assets test and assessed under the income rules. Check how super affects payments.
- Qualifying proceeds held in financial assets are deemed at the lower rate during the exemption. Surplus proceeds are generally assessable and subject to ordinary deeming. Tell Services Australia about a property sale or purchase within 14 days. Read the sale-proceeds rules.
Downsizing questions people often bring to Pension Pilot.
Will downsizing reduce my pension?
It can, especially if you release equity and keep the surplus in assessable assets. Qualifying replacement-home proceeds can have the temporary exemption described above. Your result also depends on the income test, other assets and household circumstances.
Does renting after selling help or hurt?
Renting temporarily does not by itself change your homeowner status during the sale-proceeds exemption. Rent Assistance may be available if you meet its conditions. If you stop intending to buy or establish a replacement principal home, the exemption can end early; ask Services Australia to reassess your circumstances.
Should I use the downsizer super contribution?
Check eligibility, tax, access to the money and pension effects before deciding. Super is generally assessable at Age Pension age. Different rules can apply to a younger partner’s super and to particular income streams, so a contribution is not automatically the best choice for your household.
Guidance checked against the official sources linked on this page on 9 October 2026. Rules and individual assessments can change.
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