Our no-nonsense planner Maurice Patane answers Alice’s question of whether she should sell her investment property now or after she retires.
I’m planning to retire in four years’ time, when I will be 67. Should I sell my investment property now or wait until after I’ve retired? I would probably have about $100,000 profit to declare if I sold now.
A. If your reason for selling is solely for retirement, then you should analyse whether it is viable to retain the property to provide you with an income stream. On the other hand, this may not be appropriate if the property has a debt, if it requires additional funds for improvements or if you require access to the capital amount to supplement your lifestyle needs in the meantime.
One of the main reasons for selling can be to obtain a better outcome from an alternative investment or strategy. This may include a tax-free superannuation income stream, or having access to capital to minimise your ongoing tax liabilities, or to maximise your Centrelink Age Pension.
One of the advantages of selling now is greater certainty of the proceeds. The current high houseprices combined with record-low interest rates are a good indicator that it may be a time to consider selling your investment property to secure the type of profit you may not see again for a very long time.
Of course, you will need to consider the cost of selling, which includes agent’s commission, legal fees, possible break costs on a fixed loan and capital gains tax (CGT). The advantage of deferring the sale is to possibly reduce the CGT payable when you are paying less or no tax.
The difficulty is determining the future capital growth and the optimum timeframe.
This is a great opportunity to discuss your options and the potential tax implications with your financial planner and accountant.
Do you have a question for Maurice? Then email it to [email protected]
Maurice Patane Access Financial Management
AFSL 229760 Ph (03) 9500 9988