Recently, you wrote that if a property was a principal place of residence for some of the time of ownership, one is eligible to contribute up to $300,000 as a downsizer contribution to superannuation after its sale. At the end of 2019, my super fund told me that I was ineligible to contribute some of the money to super from my proposed house sale because it was not my current principal place of residence. There was no discussion about it having been my principal residence from 2004-2012. It was a “Yes/No” scenario. Is it possible that the rules have changed since then and I am following incorrect advice? I sold the property in 2020 and am preparing to pay Capital Gains Tax on the sale this financial year. However, the money is sitting in my bank account when it seems that I might be able to put it into super. Could you please clarify?
The rules have not changed but there is no simple answer.
You could lodge a complaint against the advice provided by the super fund but this may be a drawn-out process and would not guarantee that you could make the downsizer contribution now.
You could, through a tax adviser, apply to the Australian Taxation Office for an “extension of time” to make the downsizer contribution and lodge the required form, on the basis of the incorrect advice received from the super fund. Again, there is no guarantee here.
A third option may be more palatable.
If the federal government’s proposed change to remove the work test for non-concessional super contributions from July 1, 2022, is passed, then you could make a non-concessional contribution of up to $330,000 from that date – if you are aged 67 or more and under 75.
I am aged 70 and receive an account-based pension from a government pension fund. If I was to roll over this fund into another super fund with higher returns, would I have to pay tax on the untaxed portion of my funds?
It is my understanding that any untaxed component would be taxed at 15 per cent in the receiving fund on rollover.
You may also be subject to tax on any excess untaxed rollover amount – that is, any amount that exceeds the relevant cap. This is a minefield area, so proceed with caution.
You should ask both your current super fund and your destination fund to advise you what their position is if you adopt the strategy you mention. Also, beware of choosing a fund purely on last year’s returns.
Past short-term performance is no guarantee on future performance and returns should be assessed on five-year or 10-year fund performance.
We own two properties – one our main home and the other a rental. We want to move into the rental. To minimise CGT, do we sell the main house and move into the rental, or do we move to the rental and rent out the main home?
If you sell your home after you move out it should be free of CGT but, if you rent it out, you would be liable for CGT on any increase in value from the date it was rented.
When you move into the rental it will become your principal place of residence and CGT, when sold, will be apportioned on a time living there basis, so keep receipts even while you are living there.
However, there is a lot more to this discission than just minimising your tax.
You also need to think about the potential of your current home. It may be better to take a tax-free capital gain now, use the proceeds to buy a new home debt-free and then borrow to buy another investment property.
I am about to turn 72 and still working. I want to retire soon and am about to sell my mother’s unit, which should fetch about $340,000. I will use some of this money to carry out repairs and updates (kitchen and bathroom) in my own home. My question is, will I be assessed on the selling price of the unit, or what is left after repairs to my home?
Once you receive the money you will need to advise Centrelink of a change in circumstances.
However, any money spent on improving your own home is not assessable, so once you have spent the money on your property, just advise Centrelink of the reduction in your assets and the situation should be restored.
- Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.
Article Source: www.brisbanetimes.com.au
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