Should we sell our investment property to top up our super?

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When it comes to selling property, it can be prudent to wait until you’re in a lower tax bracket to lessen the impact of CGT.

I am a self-employed 58-year-old with a super balance of $280,000. My partner is 56 with $400,000 in super. We own a home valued at around $1.8 million, with a mortgage of $500,000. We have an investment apartment which is valued at $400,000 with a mortgage of $180,000. The rental income covers the mortgage costs but not the strata/rates/land tax etc.

Provided you feel it is not going to fall in value, a better option may be to defer any sale until you both stop work. You will then be in a lower tax bracket but could still make tax-deductible contributions of up to $30,000 each to reduce the impact of the CGT. Keep in mind that any excess costs on the rental property are tax-deductible which reduces the effect of them.

The purpose of the deeming rates is to provide a universal rate for all financial investments such as cash in the bank, superannuation , managed funds and shares. It does not apply to property or personal items such as cars and caravans. It will save your daughter interest and give you both the pleasure of seeing your money doing good. There are no tax implications as it’s just money in the bank.

 

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