Selling your home to move into a retirement village — tax, super and the assets test (2026)

Selling your home to move into a retirement village — tax, super and the assets test (2026)

Selling the family home to fund a move into a retirement village puts three separate financial systems in play at once: capital gains tax, superannuation and the Age Pension assets test. Get the sequencing right and you can save tens of thousands of dollars. Get it wrong and the same money costs you. This guide, current as at 2026, walks through each system with the specific legislation and dollar figures you need.

---

Capital gains tax: your family home is almost certainly exempt

Under the Income Tax Assessment Act 1997 (ITAA 1997), section 118-110, a capital gain or capital loss on the disposal of your principal place of residence is disregarded (ATO — main residence exemption). For most Australians who have lived in their home continuously since purchase, the entire gain — even if the property has grown by $500,000 or more — is tax-free.

What if you move into the village before you sell?

You may need to move into the village months before settlement on your old home. Under ITAA 1997 section 118-145, you can continue to treat a property as your main residence for up to six years after you vacate it, provided you do not declare any other property as your main residence during that period.

Moving into a retirement village under a loan-licence or leasehold arrangement does not constitute acquiring a new main residence. You are buying a right of occupancy under a contractual licence, not real property. The six-year rule on your former home remains intact.

Partial exemption scenarios

If you rented out the family home before moving out, or if the property was never your main residence from the moment of purchase, a partial CGT liability may apply. The ATO's partial exemption formula under section 118-185 determines the taxable fraction. A registered tax agent is worth consulting if your ownership history is not straightforward.

CGT timing tip

If a small taxable component arises, consider timing settlement relative to the financial year. Deferring settlement by a few weeks can push the CGT event into the next tax year, giving you an extra 12 months before any tax falls due.

---

Downsizer contribution to superannuation: the $300,000 per person opportunity

Since 1 January 2023, Australians aged 55 and over can make a downsizer contribution of up to $300,000 per person ($600,000 per couple) into superannuation from the proceeds of selling their principal residence (ATO — downsizer super contributions). The age threshold was reduced from 60 to 55 by the Treasury Laws Amendment (Enhancing Superannuation Outcomes For Australians and Helping Australian Businesses Invest) Act 2022.

Why this matters in 2026

The downsizer contribution sits outside both the concessional and non-concessional caps (ATO — concessional super contributions). More usefully, it can be made even if your total super balance exceeds the $1.9 million threshold that would otherwise block non-concessional contributions (ATO — non-concessional contributions). For retirees with significant super already, this is one of the only remaining pathways to increase their balance tax-efficiently after retirement.

Eligibility checklist

• Aged 55 or older at the time of contribution
• The property was your (or your spouse's) principal place of residence for an aggregate of at least 10 years
• Owned the property on or after 20 September 1985
• Contribution made within 90 days of settlement
• You have not previously made a downsizer contribution from another property
• Lodge ATO form NAT 75073 — Downsizer contribution into super with your fund at the time of contribution

---

The Age Pension assets test: how retirement village entry payments are assessed

Loan-licence and leasehold villages

When you pay an ingoing contribution under a loan-licence or leasehold arrangement, your contractual right is assessed as a "special residence" asset under the Social Security Act 1991. Centrelink does not assess the full entry amount — it assesses the net realisable value: broadly, what you would receive back if you left today, after accounting for the deferred management fee already accrued.

Because the DMF begins accruing from day one and can reach 25–30% of the entry price over a typical stay, the assessed value of your village right can be substantially lower than what you paid. That is generally favourable for pension eligibility.

Land-lease communities: different treatment

If you purchase your home in a land-lease community — you own the dwelling but lease the land — the home is assessed at its full market value as a non-exempt asset. That is not the same concessional treatment as a loan-licence village.

The 12-month asset test clock

Sell your principal residence and the full cash amount is assets-tested if the proceeds sit uninvested beyond 12 months. Once those proceeds fund a retirement village entry payment, the assessed value drops to net realisable value. Timing the home sale close to the village contract signing protects pension entitlements.

Rent Assistance (March 2026 rates)

Residents paying ongoing service fees in a retirement village may be eligible for Rent Assistance (Services Australia — Rent Assistance payment rates):

• Singles: up to $211.20 per fortnight
• Couples (combined): up to $199.00 per fortnight

---

Stamp duty: the often-overlooked saving

In most Australian states and territories, the entry payment for a retirement village under a loan-licence or leasehold arrangement attracts no transfer duty. No real property changes hands — only a contractual right of occupancy. That can represent a saving of $20,000–$40,000 compared with purchasing a conventional property of similar value.

Western Australia is an exception: certain lease arrangements may attract duty under the Duties Act 2008 (WA). If you are moving into a WA village, have a conveyancer review the specific contract type.

For land-lease communities, buying the home structure typically does not attract land transfer duty, since no land is being purchased.

---

Practical timeline: 12–18 months before you move

---

Frequently asked questions

Do I pay CGT when I sell my family home to move into a retirement village?

Almost certainly not, provided the home has been your principal place of residence throughout your ownership. Under ITAA 1997 s.118-110, the main residence exemption disregards any capital gain. If you vacate before settlement, the six-year absence rule under s.118-145 applies — moving into a loan-licence village does not constitute acquiring a new main residence.

I am 57 and my total super balance is $2.1 million. Can I still make a downsizer contribution?

Yes. The downsizer contribution is exempt from the total super balance threshold that blocks non-concessional contributions above $1.9 million. You can contribute up to $300,000 regardless of your existing balance, provided you meet the age, ownership duration and 90-day timing requirements.

What is the "net realisable value" that Centrelink uses to assess my village entry payment?

Centrelink calculates net realisable value as the amount you would receive if you vacated today — broadly, your entry payment minus the DMF already accrued and other contractual deductions. This figure is lower than what you paid, often significantly so after several years, which generally improves pension entitlements.

What happens to the proceeds of my home sale if I don't move into the village for six months?

The cash proceeds are assets-tested during the period you hold them. An exemption applies to the proceeds of a former principal residence for up to 12 months after sale, provided you intend to use them to purchase another exempt asset. Confirm current exemption conditions with Services Australia.

Is my weekly service fee at a retirement village treated as rent for Rent Assistance purposes?

Yes, in most cases. Services Australia treats ongoing service fees as rent for Rent Assistance eligibility. As at March 2026, singles can receive up to $211.20 per fortnight and couples up to $199.00 combined, subject to income and assets test eligibility.

Can my spouse also make a downsizer contribution from the same home sale?

Yes, provided both of you are aged 55 or over and the home was your joint principal residence for at least 10 years. Each can contribute up to $300,000 ($600,000 combined). Each spouse must lodge a separate ATO form (NAT 75073) with their respective fund within 90 days of settlement.

Is there stamp duty on a retirement village entry payment?

In most states and territories, no — because no real property is transferred. WA is an exception where some lease structures may attract duty under the Duties Act 2008. In land-lease communities, buying the dwelling structure generally does not attract land transfer duty, but confirm the position in your state with a conveyancer.

How long do I have to review a retirement village contract?

Mandatory disclosure periods are set by state legislation. In NSW you have 14 days before signing the contract; in Victoria 7 business days. Independent legal advice before signing is strongly recommended given the complexity of DMF structures and exit entitlement provisions.

What is the deferred management fee and how does it affect what I get back?

The DMF accrues at 3–4% of your entry price per year, capped at 25–30% after seven to ten years. On a $700,000 entry payment with a 30% cap, you could receive as little as $490,000 back. Understanding this — and the net realisable value it produces for Centrelink — matters for both financial planning and pension purposes.

Does moving into a retirement village affect my future Age Pension eligibility?

Potentially yes, depending on the size of your entry payment and its assessed net realisable value. If you sell a high-value home, the proceeds may keep you above the assets-test threshold even after the village entry payment is assessed at its concessional value. A licensed financial planner can model the exact impact based on your asset position.

---

Sources

• ATO — CGT main residence exemption
• ATO — Downsizer super contributions
• ATO — Concessional super contributions
• ATO — Non-concessional super contributions
• Services Australia — Age Pension payment rates
• Services Australia — Rent Assistance payment rates
• Social Security Act 1991 (Cth)
• Treasury Laws Amendment Act 2022 (Cth)
• Income Tax Assessment Act 1997 (Cth)
• NSW Fair Trading — Retirement villages
• Consumer Affairs Victoria — Retirement villages