My recently retired parents are confused on how to consolidate their finances without being thumped with CGT and other nasties . They want to sell both their primary and investment properties and put their money into one primary residence.They purchased the IP in 1990 at 90k and stand to sell it for 350k (they also have 200k cash).They dont get much of a pension at all(asset tested) and are eating into their savings which is frightening them some what .Any advise or ideas on how to roll up their finances would be very much appreciated .
What would you guys suggest ?
Regards ChrisHi Chris,
There are a number of factors to consider in the whole equation.
Of most significance is that your parents will not incur CGT on their primary residence – therefore there are no nasties in that transaction apart from agent’s fees.
Selling the IP will, however incur CGT, and the gain will be apportioned in accordance with title ownership. However based on the information provided it may not be as severe as you imagine.
Given the length of time your parents have owned the property they can calculate CGT using the method which is more advantageous to them. A good accountant will be able to walk them through the options.
I also recommend you download the 2003/04 CGT Guidelines from the ATO website as this will provide specific information as it relates to your parents. If you have difficulty finding it email me and I’ll send you a copy by return mail.
But ……….(there is always a but) before your parents do anything I recommend they make an appointment with a Cenrelink advisor (or recommended advisor) who can see if some jigging of the structure can provide your parents with a pension or part pension.
I would also recommend your parents shift the focus from the pension – it may be possible with some expert guidance that they could live better without the pension.
People like Steve Navra have the wherewithall to assist asset rich – cash (as in income) poor people such as your parents to continue to acquire high performing assets.
Check out http://www.navra.com.au
Derek
[email protected]Property Investment Support Available. Ongoing and never stopping. PM welcome.
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