Retirement lease in village free of capital gains tax
I LIVE in a leased apartment in a retirement village. Any capital gain is included in the total from which the village owners take their deferred management fee at the sale of the apartment. When I sell the lease, is it subject to capital gains tax? If so, is the tax calculated on the total proceeds or on the amount left for me after the management fee has been deducted?
Capital gains tax does not apply – the property is regarded as your principal residence.
SOME years ago my wife and I gave our son $116,000 to help him pay his partner for her half of a property due to them separating. Originally we gave it to him as a loan after speaking to a Centrelink financial adviser. A couple of years later I got to thinking if we converted it to a gift it would reduce by the said $10,000 per year and disappear after five years. I hoped that because some of the money was mine and some my wife’s that we would get a $10,000 deduction each per year. Centrelink has said this is not correct and allowed us only one $10,000 deduction in total for the life of the gift.
Where part of a loan is forgiven in stages, deprivation will not be assessed for amounts up to $10,000 a year and $30,000 over five years.
However, the advice is correct because if the whole loan is forgiven in a single transaction, all of it except $10,000 will be assessed as deprivation with no further reduction in the amount maintained for the next five years.
The $10,000 annual limit is not per person – it is $10,000 for a couple as well as a single.
I AM a Commonwealth public servant in an unfunded superannuation fund. I am getting conflicting reports about whether I will be able to claim a tax deduction for any additional contributions I make after June 30. Can you please clarify?
Anybody can now claim a tax deduction for additional concessional superannuation contributions, but total concessional contributions including salary sacrificed contributions cannot exceed $25,000 a year.
As you are in a defined benefit fund, you may find that the notional concessional contributions that are attributed to you would be at least $25,000. If that is the case you cannot make additional concessional contributions.
IS it better to put money into superannuation or pay off your own home at the moment?
The great benefit of super is that in some cases, as in salary sacrifice, you can contribute with pre-tax dollars. It is also one of the few assets that can’t be touched if you go bankrupt.
But the price is lack of access till you reach your preservation age, which may be as much as 60. If you are young, my advice is to focus on paying off your home as a first step and rely on the employer superannuation contributions. You can always change tack as you get older.
If you are young, focus on paying off your home