This is a general guidance on how Australians can commonly use superannuation contributions to reduce tax when selling property, but this is not personal tax advice. The exact outcome depends on your age, the type of property, ownership structure, and your total income in the year of sale—so you should confirm with us before acting.
1. First: what tax are you trying to reduce?
When you sell property, the tax issue is usually:
A. Capital Gains Tax (CGT)
Applies if the property is:
- An investment property, or
- A former home that doesn’t fully qualify for the main residence exemption
CGT is added to your taxable income in the year of sale.
If you owned the property for more than 12 months, individuals usually get a 50% CGT discount.
2. How superannuation helps reduce tax
Super contributions can reduce tax only if they are deductible, meaning they reduce your taxable income (including the capital gain).
Key concept:
You cannot avoid CGT, but you can offset it by reducing your taxable income with deductible super contributions.
3. Strategy 1: Concessional (deductible) super contributions
This is the most common and effective approach.
How it works
You make a personal concessional contribution to super and claim a tax deduction.
- Taxed at 15% in super
- Instead of your marginal tax rate (up to 45% + Medicare levy)
Annual concessional cap
- $30,000 per person per year (in 2026, includes employer contributions)
Carry-forward concessional contributions
You may be able to contribute much more than $30,000 if:
- Your total super balance is under $500,000, and
- You have unused concessional caps from the past 5 years
This is often very powerful in a property sale year.
Example (simplified)
- Capital gain added to income: $200,000
- You have $60,000 unused concessional cap
- You contribute $60,000 to super
- Tax saved could be ~$20,000–$30,000 depending on your marginal rate
4. Strategy 2: Non-concessional contributions (no tax deduction)
These do NOT reduce tax, but may still be relevant for estate planning or sheltering sale proceeds.
- Cap: $110,000 per year
- Or up to $330,000 using bring-forward rules (if eligible)
Useful if:
- You’ve already maxed concessional caps
- You want money in a low-tax environment long-term
But no immediate tax benefit.
5. Strategy 3: Downsizer contribution (very important for some people)
If the property sold is your main residence, this may apply.
Downsizer rules (summary)
You may contribute up to $300,000 per person to super if:
- You are 55 or older
- The property was your main residence
- You owned it for at least 10 years
- Sale occurs after meeting eligibility rules
Important:
- Downsizer contributions do NOT give a tax deduction
- They do not reduce CGT
- But they do not count toward contribution caps
This is about moving wealth into super, not reducing tax in the year of sale.
6. Timing is critical
To use super to reduce tax:
- Contributions must be made before 30 June of the financial year of sale
- Notice of Intent to Claim a Deduction must be lodged correctly
- Funds must be received by the super fund, not just initiated
Mistiming is one of the most common (and costly) mistakes.
7. Property ownership matters
Different rules apply if the property is owned:
- Individually
- Jointly
- Through a trust or company
Super strategies are far more flexible when the property is owned personally.
8. What a tax adviser will usually check
A good adviser will:
- Calculate the exact capital gain
- Apply CGT discounts and exemptions
- Check your unused concessional caps
- Model different contribution amounts
- Ensure compliance with contribution and age rules
Key takeaways
- Concessional super contributions are the main way to reduce tax on a property sale
- Carry-forward rules can allow very large deductions
- Downsizer contributions do not reduce tax, but are still valuable
- Timing and eligibility rules are strict
Feel free to contact us and explain which strategies are likely to work best in your situation, will do a personal planning and help you implement your strategy. We will need:
- Your age
- Whether it’s a main residence or investment
- Rough capital gain
- The amount of super contributions in recent years (annual statement from your superfund).
- Your Tax File Number