Friday 29th April 2022 from 9am

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What to consider when downsizing your family home


As interest rates continue to rise, homeowners are keen to take advantage of the increased equity they have accrued in their home during the pandemic. This has prompted many older residents to consider downsizing. Attwood Marshall Lawyers Property & Commercial Law Graduate, Mieke Elzer, discusses the current property market and what people need to consider when making the move.


With costs of living and home loan interest rates steadily increasing, many homeowners have experienced a whopping spike in their monthly living expenses and may be looking for ways to be more financially stable.

In addition, the property market is cooling off and house prices appear to be correcting. Older homeowners who want to capitalise on the profit their home has made during the pandemic may be considering downsizing sooner rather than later.

It is important not to rush into these things and to make an informed decision when deciding what’s next after selling the family home.

Key considerations when downsizing: from house to apartment

Downsizing shouldn’t mean compromising your quality of life. It’s important even if you are moving from a house to an apartment, unit, or townhouse, that you have all the amenities you need.

One of the biggest things to look at if you are making the move to an apartment or community title home is the body corporate associated with the property. 

Although you can enjoy a low-maintenance lifestyle and have access to great facilities such as a pool, barbecue and entertaining areas, gymnasium, or security, this comes at a cost in body corporate fees and must be factored in when doing your homework and deciding on the best type of property to move into.

Moving into an apartment or unit also means living within the by-laws of the body corporate. By-laws may restrict what you want to do to your new property and how you want to live. If you perform unauthorised works on a community title home, do not maintain the property in accordance with the by-laws, or do not adhere to limitations associated with speed limits, common property, noise, and parking, to name a few, you could find yourself in hot water.

When purchasing a community title home, it is important to perform thorough searches on the body corporate records to check the by-laws, the body corporate’s financials, insurance records, and reports of property inspections. This information can help you make an informed decision about the property, the estate it sits in, and its management.

Other financial considerations

Other than the financial and practical advantages of downsizing there are other financial factors worth considering before making the move.

The Age Pension

Given that your home is one of the biggest assets you own, downsizing may have an impact on the Age Pension.

Many people are eligible for the Age Pension when they retire, but these benefits will depend on certain rules, including the residence rule, an income test, and an assets test.

The income test assesses all source of income an individual receives, including employment wages, income created from superannuation or financial assets and shares.

The assets test looks at the value of the assets someone owns, including their motor vehicles, business assets, and of course any property. It is important to note that your primary residence is excluded from the assets test.

Although the home you are living in may not be counted in the assets test, once you sell your property, you’ll likely have additional money available from the equity in the home. If you purchase a new home within 12 months of selling your previous home, then the money from the sale of your previous home will not be counted as an asset. However, if you purchase a new property for a lesser value, which is generally the case when you are downsizing, the remaining cash that may be sitting in a bank account or retirement fund would be assessed as part of the assets test.

Making the move to a retirement village – what to consider

Moving into a retirement village or aged care facility is a significant transition and it is important to do your homework and get trusted advice before signing an agreement.

There are different types of village ownership and contracts available. Some of the options available include:

  • Leasehold arrangement: rather than owning the property, a leasehold arrangement provides the purchaser with a right to occupy a premises under a long-term lease in which you pay rental fees and other costs such as maintenance fees for the upkeep of the property.
  • Loan and licence arrangement: you do not own the property under a licence arrangement; however, you pay a contribution when you move into the property and are granted a non-interest loan that you will pay off while residing at the property. There are often other costs associated with this type of arrangement.
  • Strata or community scheme: in this arrangement you purchase the property directly, but also sign an agreement with the associated management. This will see the purchaser pay corporation fees as well as maintenance costs.
  • Rental agreement: there are various types of rental agreements that may be available within a retirement village. The first being that you pay rent to reside in the property, the second where you purchase the property and pay rent on the land that it sits on. In this type of arrangement, other than the rent, there are usually no other fees applicable.
  • Registered interest holders and non-registered interest holders: when you live in a retirement village you will either be a registered or non-registered interest holder. The key difference is that registered licence holders tend to pay higher costs for their property, however, they will maintain more flexibility and independence in regard to how they can treat the property.

Retirement Village Contracts and Agreements have been referred to as the most complicated finance contracts in Australia, and for good reason. Don’t underestimate these contracts and make sure you do your due diligence. Each State and Territory has different regulations governing retirement village contracts. Depending on which State or Territory you reside it is important that you understand the requirements in your jurisdiction for Operators to disclose costs and exit strategies.

There’s no such thing as the “best type” of contract to choose and it will come down to your personal circumstances, where you choose to move to, and what is the best fit for the individual, or couple.

Read more: Why you must get legal advice before signing Retirement Village Agreements

Incentives available for people downsizing

There are a number of government incentives specifically offered to older Australians who may be considering downsizing their home.

Super contributions when downsizing scheme

From July 2022, anyone aged 60 years and over who meet the ATO’s downsizing eligibility criteria can make contributions of up to $300,000 per person ($600,000 per couple) into their superannuation account from the proceeds of the sale (or a partial sale) of their home.

Until recently, the criteria set by the government only allowed people aged 65 years or older to make superannuation contributions when downsizing. Legislative amendments in July 2022 lowered the age to 60.  

There are certain other eligibility criteria that must be satisfied for anyone wanting to boost their super when they downsize, including:

  • The property must be located in Australia and have been owned by the individual or their spouse for at least 10 years and the sale of the property must be exempt, or partially exempt, from capital gains tax.
  • Anyone making downsizing contributions into superannuation cannot have previously made a downsizer contribution into their super fund from the sale of another home.
  • As part of the process, when making the contribution to your superannuation you must provide the “Downsizer contributions into super form” to your superannuation fund, which can be downloaded from the ATO website.

In Victoria, Tasmania, and the Northern Territory, sellers can benefit from a one-off stamp duty exemption, or concession, when purchasing a smaller home and downsizing. This can potentially save thousands of dollars for those eligible. Unfortunately, these concessions are not available currently in Queensland and New South Wales. Hopefully these state governments will follow suit and introduce something similar.

Attwood Marshall Lawyers – taking the stress out of downsizing

It’s important not to rush these decisions. Although the property market can seem very competitive and property moves fast, you don’t want to let the fear of missing out push you into making a decision you are not comfortable with.

Before signing anything, always have a property lawyer look at the contract and provide advice about the special conditions that are included, and anything else that may need to be considered before an offer is put forward.

Downsizing is a big decision, and you want to get the most out of the move to support retirement goals and ensure your lifestyle and financial interests are met.

Our property lawyers have been helping people buy and sell property for over 75 years and know what it takes to remove the stress from the transaction.

If you are selling a home at the same time as buying, simultaneous settlements can be complicated. If something goes wrong with one settlement, it will have a flow-on effect and impact the other. A suitably qualified property lawyer will always have a contingency plan in place so that they are prepared for any obstacles that may arise during the settlement process and be across all important dates and deadlines.

Our property lawyers are ready to guide you through the process of buying and selling. They will ensure that the appropriate checks and searches are done and will provide you with personalised advice so you can have peace of mind that your interests are protected.

Attwood Marshall Lawyers is a PEXA  certified law firm, allowing us to deliver fast, efficient, secure property transactions. To discuss your property and conveyancing needs, contact our Property and Commercial Department Manager, Jess Kimpton, on direct line 07 5506 8214, mobile 0432 857 300 or email

We also have a dedicated team who can provide advice on transitioning to aged care. Attwood Marshall Lawyers are one of the few law firms who have an Accredited Aged Care Professional on the team, who can provide insight and professional advice on all areas of aged care including at home care, retirement village or residential care facilities.

Book an appointment online instantly by clicking here. Our lawyers are available at all our conveniently located offices at Robina Town Centre, Coolangatta, Kingscliff, Brisbane, Sydney and Melbourne.

Read more:

Downsizing the family home and planning for retirement – things to consider when entering an aged care facility and buying a unit “off the plan”

Common misconceptions about owning a duplex and the existence of a body corporate

Signing a Contract of Sale to buy property without getting legal advice could cost you your life savings


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Mieke Elzer - Lawyer - Property & Commercial

Mieke Elzer

Property & Commercial

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The contents of this article are considered accurate as at the date of publication. The information contained in this article does not constitute legal advice and is of a general nature only. Readers should seek legal advice about their specific circumstances. 

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