Should cash-strapped couple sell second house?

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Shannon and his wife own two homes but due to unemployment are depleting their savings. They have asked finance guru Noel Whittaker what he thinks is the best strategy in their case.



Q. Shannon
We are 60 and 54 years old, and own two houses. We live in one and it is twice the value of our second home, which we rent to our daughter. My wife works but I have been unemployed for two years, we are living off our savings and they are being drained at a rapid rate. What is the best way to prepare for retirement? I have in mind selling the larger home and moving into the smaller one and placing the proceeds of the home sale into our self-managed super fund. What are the ramifications of doing this? We have lived in both houses, the current for 14 years, and the second for nine years. What is your advice?

A. You will need to have face-to-face advice with an expert who has looked into your financial and personal situation. But generally, the first home should be free of capital gains tax as it appears to be your residence, but there could be long-term implications regarding capital gains tax on the second property once you live in it. However, the good news is if you live in it for a long time, any capital gains tax on that property may be quite small. Placing the excess proceeds to superannuation could be useful for tax minimisation, but you would need to make a long-term decision as to whether you may be eligible for an Age Pension. An adviser can guide you through all these issues.

Do you have a question you’d like Noel to tackle? Email us at [email protected]

Noel Whittaker is the author of Making Money Made Simple and numerous other books on personal finance. His advice is general in nature, and readers should seek their own professional advice before making any financial decisions.

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Total Comments: 11
  1. 0

    If they are spending down their savings rapidly then perhaps the wife is only working part time? Could he not claim Newstart thus delaying the sale of their home for a while longer? It might not be more than a couple of hundred dollars a week, but it might help until he finds work or they are able to sell the home.

  2. 0

    “If you live in it for a long time”. Please clarify Noel as that is more bait than information.

  3. 0

    We don’t know how old these people are which could have a bearing on Noel’s advice. I can see this subject is not popular with the usual posters who frown on such things as tax minimisation.

    • 0

      An art form in your circles. Or is that rorting and tax evasion?

    • 0

      I don’t think that there is anything illegal in tax minimisation, as long as one obeys the rules that are currant. After all it is you that labored end earned the money in the first place. The ages of the couple in question are 60 & 54, so a few years to go yet before retirement.

    • 0

      Difficult question really; does the daughter pay a fair rent, is the rent declared in a tax return and so on. Do you really want to go back to work? (not on job seeking allowance). Does one expect to collect age pension in the future, if so, having 2 houses is a no-no anyway. It will take a professional a while to work it all out.

    • 0

      Thank you inquisitive. 🙂

  4. 0

    If the husband is 60, why doesn’t he move his share of the super in their SMSF into pension phase & draw a pension? It will be tax free since he is 60.

  5. 0

    It is time for all of us (that means you) to rant at our MPs and Senators daily to take action for human decency and a huge stress reduction for pensioners

    A pension is not welfare.

    Most economist say we will save taxpayers money by dropping asset testing because of the massive overheads cost in running Centrelink and the 10,000 conflicting rules.

    Hiring more Centrelink staff will only increase taxpayer’s costs for processing the creeping insane red tape monster system politicians and well paid bureaucrats have created.

    Help scrap it now. Become a hero.

    Even poorer New Zealand has a NO ASSET pension so it is cheaper and user friendly.

    Why worry that few million$ earners get it too. That is peanuts to them, not enough for a good vintage champagne.

    Do retired and retiring people really look forward and want 100++ visits to/from Centrelink and be part of 3 million waiting queues and lost calls?

    Does your MP really like being part of the system that allows this indirect abuse of the elderly?

    This abuse is actually sponsored by our government and forced down to Centrelink and borders on a criminal act.

    Why do MPs normally compassionate persons let this Centrelink abuse happen at taxpayers’ expense?

    Some opposition and independent MPs stand to lose their chance at being part of the needed government changes

    We all need to tell our MP and senators every day that these criminal asset tests for a pension must be dropped now.

    Also contact opposition and independent MPs who can help us to get a fair deal on pensions




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