Can’t claim from super portion of refinanced loan
I HAVE a $300,000 mortgage on an investment property worth $500,000, which is breaking even and not providing any negative gearing benefit. I am thinking of refinancing the loan and borrowing an extra $100,000.
I would then invest $50,000 in shares and contribute $50,000 to my super. Would I be able to claim this as an investment cost and regain the negative gearing benefit for the property, given I am using the funds for investment purposes, although not for property investment?
You can claim the interest on that portion of the loan that is used to buy income-producing shares, but no deduction is allowed for interest on money borrowed to invest in superannuation. I AM 61 and have a defined benefit superannuation of $50,000 per year from the federal public service. My wife will be getting a three-day-aweek job soon. We are debtfree and have $280,000 to invest. Where is the best investment for this amount that will help with my superannuation?
Unless your wife is much younger, the best strategy may be to make non-concessional contributions to her fund, which will give you flexibility in your superannuation and give you more room to move if the rules change. Make sure you take advice because there are caps on contributions and huge penalties for exceeding them. YOU said recently that if someone dies and their beneficiary is a spouse or a dependent, the entire proceeds of the deceased’s superannuation would be tax free. But if they are a nondependent there is a death tax of 15 per cent plus Medicare levy on the taxable component. Do you know if this death tax applies to a married couple who are legally separated, but not divorced, one of whom has an SMSF, the other not.
Superannuation expert Monica Rule explains that for a lump sum death benefit to be received tax free by a “death benefits dependant”, the person would need to be the deceased’s spouse by marriage, a de facto partner or a former spouse.
Under the superannuation law, a death benefit can be paid directly to a “dependant” who is a deceased’s spouse by marriage or a de facto partner. A former spouse cannot receive a death benefit directly from an SMSF. However, they can receive it via
‘Do you know if this death tax applies to a married couple who are legally separated?
the deceased’s estate if the superannuation is paid to the deceased’s legal personal representative, who then distributes the death benefit in accordance with the will.
So, in the example given, the spouse who is legally separated but not divorced is still a spouse by marriage. Therefore, they can receive a death benefit directly from a superannuation fund as well as receive the lump sum entirely tax free.
But, if they were divorced, although still entitled to the lump sum tax-free death benefit, they would not be able to receive it directly from the deceased’s super fund.