Downsizing and the Age Pension.
Selling the family home can change your Age Pension result in more than one direction. Here’s what typically shifts, and what’s worth checking before you list the house.
What changes when you downsize.
- The home itself is exempt from the assets test while you own and live in it — sale proceeds are a different story once they land in the bank.
- Proceeds earmarked for a new home can be exempt from the assets test for up to 12 months, but they’re still deemed for the income test during that window.
- Selling and not immediately rebuying can shift you from homeowner to non-homeowner status, which raises the assets-test threshold but can also open up Rent Assistance.
- The downsizer super contribution scheme lets eligible households put sale proceeds into super — useful for structuring, but super is itself assessable once you’re Age Pension age.
- Timing matters: selling before or after a pension review, and how long proceeds sit as cash before being reinvested, can both affect the estimate.
Downsizing questions people often bring to Pension Pilot.
Will downsizing reduce my pension?
It depends on what you do with the proceeds. Money that stays as cash or goes into super is assessable; money spent on a new home isn’t. The size of the gap between sale price and new purchase price usually drives the result.
Does renting after selling help or hurt?
Moving to non-homeowner status raises your assets-test threshold and can unlock Rent Assistance, but every dollar of sale proceeds not spent on a new home is still assessed as a financial asset.
Should I use the downsizer super contribution?
It can be a useful structuring tool, but it doesn’t make the money exempt — once you’re Age Pension age, super is assessed the same way other financial assets are.
Up next
Age Pension assets test
See how homeowner status changes the threshold.
Age Pension guide
Understand the assets and income tests.
Retirement income planning
Turn lifestyle goals into income targets.