Hi
I have to say before end of June this year I will have lots and lots of money from the sale of my home for higher rise (3 storey in city)development. I already own investment properties and one of these will become my new home to halve the capital gains tax over 5 years. I have the choice of putting all this extra money (pay out loans on investment properties too) into super and take benefit of it being available to me tax free in a few years when I turn 60 or to re-invest the bulk of it into investment properties. If I did nothing to add to my super I would still be fine to live off it when I do formally retire in a few years. Having all the extra money into super seems good re the tax free aspects and the peace that it grows without having to do anything. There of course is always the possibility that the stock market will crash and hence so will the super. Alternatively I could take on all the pain of property investing at least in part which is something I like doing anyway. There of course then is the business of paying tax on the income these paid out investment properties would yield and of course the capital gains tax when sold. Perhaps I should just hand all the decision-making to an investment adviser though this is not something I trust anyway. I’m glad I did not listen to the adviser who said I should sell my home 5 years ago at a price of 550k…….it’s sale price is more than 3 times that figure! Then again the stock market has boomed also in this period. Sorry not boasting here but it’s important to realise the value of the tax free benefits (ie no capital gain tax) of a home property if you buy in the right location….better a humble abode in the right location than a mansion on a hill in the suburbs (if wealth is your objective).
I also note that a lot of people heading towards 60 are selling their homes for the new super benefits (has to be done before 30 June this year if putting a lot into it) and prior to the new super rules would’ve invested in property….hence with the deluge of baby boomers soon to ‘arrive’ with money for investing they will instead put their money into super for cash flow and free tax. This seems to me that it will have a negative impact on property investing….although scarcity of new developments means an increase in cash flows from rising rents in the right areas.
So you can see why I am confused on where to put the bulk of this money…..super or property ? So even though I have all the money in the world here I am burdening myself and you lovely people with this question…….I should just take the easy option of sticking it into super and forgetting about it …..but no, as a human we have to keep giving ourselves extra pain for more gain regardless of our financial status. I could of course give it all away to the poor and follow Christ as some? do…..perhaps I should work on that one!
CarpeRemember that Superannuation is not an investment itself, just a tax structure. If you want to invest in property and also take advantage of the new super rules, why not consider a SMSF?
If you are suggesting a Self Managed Super Fund, what are the start up and ongoing costs likely to be
Self Managed Super Fund establishment would be $750 inc GST.
Ongoing costs are;
ATO Supervisory Levy – $45 ($150 from 2007 FY onwards)
Annual Audit & Tax Return depends upon the level and complexity of the transactions and bookkeeping, but as a guide most of my current clients fees are below $1000.Basically, the super fund tax return and accounts are similar in time/cost to a small business except that the SMSF must have the accounts audited.
Depending upon the value of assets in the fund, an SMSF can be cost effective, but an advantage can be the control over your investments and superannuation money.
Email me directly if you need any further help/advice on setting up a SMSF.
Ross
Trajik…..thanks re suggestion to consider SMSF. I had not considered this at all. Currently I just use Comm State Super Fund and have the investments spread over a range of investment options like Aust Shares, Global Shares etc etc. Compared to a SMSF approach this may be weak way to operate as I I guess I can do much more with SMSF including property investment and still be tax free. What sort of adviser do I use to get me to invest in the best SMSFway considering my situation?
CarpeHi Carpe_diem,
Send me an email and I’ll be happy to help out, or point you in the right direction.
regards
Ross
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