Benefits in cashing in investment property and paying off your home By George Cochrane

 

My husband and I have no children, as I had cancer aged 29. We are both aged 45 and have two properties – our former home in Melbourne and our home since 2017 on the Sunshine Coast. Each is worth about $1.2 million, with mortgages of $350,000 and $695,000, respectively. My husband earns about $100,000 a year and I earn $34,000. We have $200,000 in a mortgage offset account and $885,000 combined in superannuation. The Melbourne house needs about $60,000 in repairs, and we don’t know whether to fix it or sell it. If we do sell, neither of us wants to put extra money into super, as we don’t want to wait until we are 70 to access it (and I might not live that long). Should we pay down the loan on the Queensland house and be mortgage free? T.G. 

Tough question, as I generally don’t favour selling houses in a capital city. 

An investment property needs $60,000 of repairs. Should the owner fix it or sell and pay off the mortgage on their home? 

However, considering your medical history, I suggest that, by selling the Melbourne property at the top of an historic boom and clearing all your debts, you could substantially reduce any stress upon yourself. Stress, as you know, can contribute to a recurrence of disease. 

With about $350,000 left over, I would bide my time for a couple of years. 

When interest rates do rise, local units or apartments could become attractive investments. 

I have $100,000 in the Westpac Balanced Growth Fund within BT's Investor Choice. I received a distribution in July of 3950 units, however the exit price on June 30 was $1.4248 and the entry price on July 1 was $1.3524. The end result of the price drop was to negate any increase from the distribution. So, basically, I received 3940 units but no increase in dollar amount. Is this normal and expected? I am planning to retire at age 59 in 2022, while my husband will work five more years and retire at 62. I have $140,000 in Vic-super and $32,000 in the Emergency Services and State employees (ESS) fund. Am I able to move the $100,000 from BT into Vicsuper without being taxed? K.K 

Managed funds typically see their unit price increase as income builds up in the fund, but then see their price fall after a distribution. 

If there is growth in the value of the fund’s underlying assets, then your investment would increase in value. 

You can cash in your non-super BT investment at any time, but could face a Capital Gains Tax liability, if the investment has grown. 

Once cashed in, you can place up to $110,000 a year into a super fund as a non-concessional contribution, i.e. not taxed but no deduction either. 

I am aged 72, on a full pension and own my studio apartment in Rushcutters Bay. My heart tells me to live here for as long as possible. My head tells me to move. You see, my home is on the third floor and has no lift. Selling my studio would give me a sudden amount in my bank account, which, of course, would soon be spent on another home either on the ground floor or with a lift. Will it affect my age pension? A.P. 

If you are healthy – and you did not say that you aren’t – then climbing steps daily is more likely to lengthen your life. Follow your heart. 

If you do decide to sell, any money used to buy a new home is ignored by Centrelink. 

Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions. 

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