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Find out what your peers are asking – based on real-life questions submitted to TechConnect.
By Stuart Sheary, Senior Technical Manager
A: To be eligible to make a downsizer super contribution Pierre and Jan need to satisfy several requirements. A checklist at the bottom of the page can assist in determining eligibility however a disposal of a retirement village leasehold may qualify for a downsizer super contribution.
The downsizer legislation requires a disposal of an ownership interest in a dwelling which includes a ‘right to occupy’ the dwelling as defined by s118.130. A leasehold would ordinarily give residents a ‘right to occupy’ the dwelling. Under some circumstances dwellings are not included, for example mobile homes, which are specifically excluded from downsizer super contributions.
Fortunately, in this case their unit in a retirement village is a permanent dwelling.
The retirement village unit must also qualify for the main residence exemption (or would have if there were an assessable gain). A disposal of a retirement village leasehold can qualify for the main residence exemption as confirmed in the ATO’s Private Binding Ruling Authorisation Number: 1051322027435.
Units in retirement villages should not be confused with lifestyle villages which have different characteristics and which may have eligibility implications for downsizer super contributions. See IOOF TechConnect Q & A from September 2020 relating specifically to downsizer super contributions from the sale of a lifestyle village home.
If Pierre and Jan are unsure as to their eligibility, they can call the Australian Taxation Office Superannuation enquiries hotline on 13 10 20 for confirmation.
If you have any questions, or would like more information, please contact the IOOF TechConnect team on 1300 650 414.
The information in this section of the website is intended for financial advisers only and is not to be distributed to clients. It has been prepared on behalf of Australian Executor Trustees Limited ABN 84 007 869 794 AFSL 240023, IOOF Investment Management Limited ABN 53 006 695 021 AFSL 230524, IOOF Investment Services Ltd ABN 80 007 350 405, AFSL 230703 and IOOF Ltd ABN 21 087 649 625 AFSL 230522 based on information that is believed to be accurate and reliable at the time of publication.