The Unlocking Supply of Family Homes Bill 2025 lowers the minimum age for downsizer superannuation contributions from 55 to 50, extends the post-sale window from 90 days to 12 months, and raises the maximum contribution from $300,000 to $500,000. These changes aim to help older Australians move into more suitable housing while freeing up larger homes for younger families.
This Bill amends the Income Tax Assessment Act 1997 by modifying section 292-102:
The existing eligibility criteria in section 292-102 remain unchanged: the home must be the individual’s main residence for at least 10 years, located in Australia, not a mobile dwelling, and the contribution cannot exceed the sale proceeds. Contributions continue to count toward a person’s transfer balance cap.
The bill creates a win–win by simultaneously increasing housing availability for younger Australians and improving the financial security of retirees. By lowering the age threshold and raising the contribution cap, more older homeowners can downsize without fearing a hit to their long-term retirement income.
Releasing larger family homes onto the market helps alleviate pressure in a tight housing market. When older Australians move into smaller, more manageable properties, they free up homes that are better suited to growing families—a clear social benefit that reduces intergenerational competition for housing [Judgment].
For older Australians, the measure offers greater flexibility: extending the contribution window to 12 months acknowledges real-world delays in selling and settlement processes, and increasing the limit to $500,000 reflects current property values, ensuring the policy remains practical and relevant.[1]
ATO, "Downsizer Contributions Statistics", accessed June 2024, showing 98,595 individuals have made downsizer contributions since 2018-19.
Even with expanded parameters, downsizer contributions will unlock only a small fraction of the total family-sized housing stock and are unlikely to meaningfully ease the broader affordability crisis. Australia needs large-scale supply-side reforms—such as increased social housing and streamlined approvals—rather than modest tax concessions [Judgment].
Moreover, this policy primarily benefits homeowners who already hold substantial property wealth. Increasing the cap to $500,000 skews support toward higher-valued homes, effectively subsidising those with the greatest means rather than the most need, and risks exacerbating intergenerational inequality.
Finally, the fiscal cost of foregone revenue from higher downsizer contributions could be better directed to targeted rental assistance or first-home buyer grants, which directly address affordability for younger and lower-income households.
2025-11-26
Senate
Before Senate
HUME, Sen Jane
Unspecified
Housing Policy, Taxation, Social Support / Welfare