Most downsizing mistakes start with one simple calculation: what your current property may sell for, minus what the next property may cost. That gives you a price gap. It doesn’t give you the full result.
Your real position also depends on selling costs, buying costs, ongoing expenses, timing and what happens to the sale proceeds. Put those decisions into one plan before you commit, and the move becomes much easier to judge.
1. Comparing the two property prices—and stopping there
It feels logical to start with two numbers.
If your current property may sell for $1.4 million and the next property costs $950,000, the headline gap is $450,000.
But that isn’t the amount left over.
Selling and buying can involve agent and marketing costs, legal or conveyancing fees, transfer duty, inspections, moving costs and finance costs. If the next property is in a body corporate, you also need to understand its ongoing fees and likely future work.
The better move is to build one worksheet with four sections:
- the likely sale range for your current property
- every selling cost
- the full cost of buying and moving into the next property
- the cash buffer you want to keep after the move
Use a range, not one perfect number. Property values and transaction costs can change before settlement.
2. Choosing a smaller property before defining the lifestyle
Smaller doesn’t always mean easier.
A compact townhouse may have stairs. An apartment may have body corporate fees and rules that don’t suit you. A property with less land may still be far from family, shops, medical services or public transport.
Before you search, write down what the next property must make easier.
That might include:
- fewer stairs
- less yard work
- room for visiting family
- secure parking
- space for a pet
- easy access to shops and healthcare
- the ability to lock up and travel
Separate the non-negotiables from the nice-to-haves. Otherwise, it’s easy to buy a smaller property that solves the wrong problem.
3. Treating all sale proceeds as if they work the same way
This is where broad internet advice can cause trouble.
If you receive an Australian Government payment, the treatment of your sale proceeds can depend on what you plan to do with the money.
Services Australia says that, for a principal residence sold from 1 January 2023, the portion you intend to use for a new principal residence may be exempt from the assets test for up to 24 months. Some people may receive a further exemption of up to 12 months. Extra proceeds can be treated differently.
Services Australia can also count income from money held in financial assets. The treatment depends on your circumstances and what you do with the sale proceeds.
So don’t rely on a simple line such as selling will cut your pension or the proceeds are exempt. Either statement can be incomplete.
Check your position with Services Australia and a licensed financial adviser before you make commitments.
4. Assuming the downsizer contribution is automatic
The Australian Taxation Office allows eligible people aged 55 or older to make a downsizer contribution to super from an eligible property sale.
One person can generally contribute up to $300,000, but never more than the eligible sale proceeds available to them. Age is only one part of the rule.
Ownership and principal-residence tests apply. The contribution normally needs to be made within 90 days after ownership changes. You also can’t use the measure repeatedly for different property sales.
Services Australia can also include a downsizer contribution held in super in the Age Pension means test.
It may be useful for some people. It isn’t an automatic benefit for everyone. Check eligibility, timing and the effect on your position before settlement.
5. Trying to solve the sale and purchase separately
The order of the move matters.
Some owners want to buy first so they know where they’re going. Others need to sell first so they know exactly what they can spend. A longer settlement, bridging finance, temporary accommodation or a subject-to-sale purchase may be relevant in some situations.
Each option changes the risk.
If you buy first, you need a clear finance and fallback plan. If you sell first, you need enough time and flexibility to find the right next property. If both settlements need to line up, the contract terms become important.
Map the sequence before you list or make an offer:
- Estimate the likely sale range for your current property.
- Set the full budget for the next property and transaction costs.
- Decide which settlement order you can manage.
- Confirm finance, legal and personal financial advice where needed.
- Only then narrow the property search and sale timing.
The plan to make before you downsize
Downsizing isn’t automatically the right move. And waiting isn’t automatically wrong.
The goal is to know what the move would look like before the sale or purchase starts controlling your choices.
Your plan should answer five questions:
- What may your current property sell for?
- What will it cost to sell, buy and move?
- Which next properties actually suit the way you want to live?
- How should the sale and purchase be timed?
- What personal advice do you need about finance, super, tax or government payments?
For the complete planning sequence, see the Gold Coast Downsizing Hub.
If you want to organise the property numbers first, use the Downsizer Gap Planner. It provides an indicative planning estimate. It isn’t a property appraisal, financial advice or a promise about your final position.
Frequently asked questions
How much money will I have left after downsizing?
Start with a realistic sale range, then subtract selling costs, the full purchase price, buying costs, moving costs and any finance costs. Keep a buffer for changes and unplanned work. Your personal tax, super or government-payment position may also affect the amount available to you.
Can downsizing affect the Age Pension?
Yes, but the treatment isn’t the same for every dollar or every person. Services Australia may temporarily exempt the portion of principal-residence sale proceeds intended for a replacement principal residence. Extra proceeds and money moved into other assets can be treated differently. Check your own position before acting.
Who can make a downsizer contribution to super?
Eligible people aged 55 or older may be able to contribute up to $300,000 from an eligible property sale. Ownership, main-residence, timing and previous-use conditions apply. Check the current ATO rules and get personal advice.
Should I buy before I sell when downsizing?
There is no single answer. Buying first can give you certainty about the next property but may create finance and holding risk. Selling first can clarify your budget but may create time pressure. Compare both sequences with your agent, lender and solicitor or conveyancer.
Does downsizing mean moving into an apartment?
No. The right choice might be an apartment, villa, townhouse, duplex or smaller freestanding property. Start with the lifestyle and access requirements, then choose the property type.