Downsizing is a real estate trend gathering momentum in Australia, propelled by generous superannuation concessions offered to older Australians to move out of their family home into more compact accommodation.

KR Peters director Peter Nicolls says enquiries from people looking to downsize and put their family homes on the market are growing at both the firm's Officer and Wantirna South branches.

"The benefits of people taking advantage of downsizing, as long as they comply with all conditions, is that the husband and wife can put $300,000 each into superannuation," Mr Nicolls said.

This financial strategy can be much more lucrative than parking money in the bank as Mr Nicolls explains.

"Until 12 months ago interest rates were .10 per cent so people with bank deposits were getting peanuts.

"After 12 rate rises, people with deposits are now getting 4.8 per cent to 5 per cent, but rates won't stay high forever and returns on bank deposits will start to diminish. Industry super funds average returns of around 7 to 10 per cent. Plus in a super fund you are only taxed at 15 per cent so you are actually a lot better off.

"Putting money into super gives you the flexibility to earn more money while paying less tax and downsizing is a great way to boost super balances.

"We have clients keen to sell their homes because they want to pay off their mortgage, if they have one, put up to $600,000 per couple in superannuation and be debt free."

Mr Nicolls said the federal government has made downsizing financially attractive to encourage people to sell now to help alleviate the country's worsening housing crisis.

There are a number of rules around downsizer superannuation contributions to be aware of as outlined by the Australian Taxation Office:

* You must be aged 55 or over at the time the contribution is made

* The contribution is made from the proceeds of the sale of a single eligible property in Australia

* You do not claim a tax deduction for this contribution

* You have owned the property for at least 10 years prior to the sale

* The contribution is made within 90 days of settlement

* An election is made to treat the contribution as a downsizer contribution

* You have not previously made a downsizer contribution in relation to another sale

*You claim the capital gains tax main residence exemption on the sale of the property (wholly or partly)

The ATO guidelines further state that no work test applies, the contribution is not limited by the total superannuation balance test and the contribution does not count towards any superannuation contribution caps.

And while selling a family home can be an emotional experience, Mr Nicolls said many retirees are keen to embrace a sea change or a tree change without the burden of a large property to maintain.

Mr Nicolls encouraged anyone thinking of selling their family home to discuss their options with the KR Peters team.

"This strategy can have enormous financial benefits. People won't sell unless they have a pretty good reason and this is a pretty good reason," Mr Nicolls concluded.

To discuss downsizing, contact a KR Peters real estate expert at Officer 5943 1111 or Wantirna South 9800 0000 or email sales@krpeters.com.au