4 steps to downsizing without regret (get it right first time)

If you’ve been following the news lately, you’ve probably noticed capital gains tax (CGT) returning to the spotlight.

The challenge

It’s expected that by the middle of the century more one in three Aussies will be aged 55 and over, representing an enormous demographic shift from only a few decades earlier, driving a significant rise in downsizing house decisions compared to just a few decades earlier.

Although immigration helps to slow the ageing of the population, even the immigrants themselves eventually become older – including myself!

Source: GemLife downsizing report, 2025

It’s commonly said that moving house and changing jobs are two of the most stressful things you might do in life, so it stands to reason that downsizing in anticipation of retirement could fit squarely into those buckets.

Here are the four steps you need to take to ensure you get it right first time.

1 – Define what you are moving towards, not just away from

A 2025 research report by GemLife showed that many Aussies aged 55 and older have far more bedroom space than they need.

Source: GemLife downsizing report, 2025

Downsizing where you live, then, is partly about reducing space…but remember it’s not only about reducing space!

The downsizing process should be driven by your personal lifestyle goals, ideal location, bringing more simplicity into your life, and ease of living.

2 - Avoid the common emotional traps

Moving home is always likely to be an emotive issue, and it’s not at all uncommon to become over-attached to the family home.

Moving home can be stress-inducing, and there is often a concern of not being able to find an appropriate home to move to, or losing contact with friends in the community.

But rushing into a compromised property may lead to regret or buyer’s remorse, so don’t underestimate your future needs.

Surveys show that the main priorities for downsizers include finding a low maintenance place to live, somewhere with great lifestyle options, to be close to friends and family, and to escape from the hustle and bustle of city living.

3 - Understand the financial implications clearly

One of the key drivers for many would-be downsizers may be to free up equity for retirement.

Indeed, in all cases it’s important to understand the financial impacts of such a move.

For example, you may be able to make a downsizer super contribution of up to $300,000 per eligible person at the time of writing (check the ATO rules or with your accountant to see if you may qualify).

Whenever you move home there are also costs to consider.

Consider capital gains tax when you sell – if you have always lived in your home and not rented it out there may be none to pay – and then there is likely to be stamp duty and legal fees to pay on the purchase of your new home.

If you choose to move into an apartment or townhouse on a body corporate or strata scheme, have a careful think about what facilities are important to you.

Will you need a lift, a concierge, a pool, a gym, sauna, or spa?

Each tends to come with an associate recurring cost, so it’s worth carefully considering what you really want and need to use, rather than paying high quarterly strata fees for amenities from which you don’t personally benefit.

Then you can think about how to deploy the released equity in the most efficient and effective manner.

4 - Choose the right property type and location

Retirement communities work for some downsizers, but not all, with age restrictions, ongoing fees, and poor investment performance from a capital values perspective putting many prospective buyers off.

Most should focus on low maintenance, accessibility and walkability, access to shops, supermarkets, parks, green space, public transport links, and convenient healthcare options - and futureproofing more broadly - as making the wrong choice here may be tricky to unwind later.

It is true that Australia has often failed to deliver suitable housing for downsizers, such as attractive townhouses or 3-bedroom apartments without too many stairs in the development.

Don’t be afraid to seek professional help if you need it, aim to enjoy the process and the progress, and here’s to a great future for you in retirement!

With greater life expectancy in Australia, may you have a long and prosperous adventure.

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