Downsizing your property involves more than just selling a home; it can significantly impact your overall estate planning, particularly regarding asset distribution and potential capital gains tax implications. As of December 2025, it’s a common consideration for Melbourne homeowners looking to simplify their lives and potentially unlock equity.
In Melbourne’s Eastern Suburbs, where family homes near sought-after schools are prevalent, downsizing often means selling a larger property and purchasing a smaller one – perhaps a villa, apartment, or retirement living option. This sale triggers a capital gains tax (CGT) event. However, the main residence exemption may apply, potentially reducing or eliminating CGT. Currently in Melbourne, the proceeds from the sale will need to be factored into your estate’s overall value. Downsizing can also influence Centrelink eligibility for the Age Pension, as the released equity is considered an asset. Fletchers’ experience shows that preparing a comprehensive property appraisal, including potential sale price and associated costs (typically $3,000 – $8,000 for a full marketing campaign as of December 2025), is a crucial first step in this process. We also observe that buyers in 2026 strongly favour well-presented, light-filled properties, so preparation is key to maximising your sale price.
Effectively managing the financial implications of downsizing is vital for a smooth estate planning process and ensuring your wishes are met.