Name of the game is to maximise all your assets
YOUR ADVICE
MY wife and I own an investment property valued at $850,000 and currently yielding $700 a week in rental income. We owe $300,000 on this investment property and we also own our house. I am 62, retired and self-funded through superannuation.
My wife is 59 and will be retiring soon at around 60 years of age. My question is, should we withdraw the $300,000 balance that is my wife’s super and pay out the loan or should we keep the loan running? The investment property would be our only declared income.
If we assume the net rent is $29,000 a year, and the interest is $14,000 a year, it is clear that the property is positively geared and returning around $15,000 a year net. As the years go by, one would expect both the property value and the rents to increase, while the real value of the loan is being reduced by inflation.
Provided you are convinced that the returns from your super fund should exceed the interest rate you are paying on your loan, it would make good sense to keep the loan going.
Remember, the name of the is to maximise the assets working for you.
I HOLD a Commonwealth Seniors Health Care Card – and my wife (who does not hold one, only just having turned 60) are fully funded retirees – so the card is the only courtesy we receive from government.
We are now precluded from contributing to superannuation, because if we start another Allocated Pension, the Allocated Pensions we currently enjoy will be exempt from “grandfathering” and included in our income, so losing the CSHCC on income.
However, the draconian measure is that, if we are absent from Australia (and we have never holidayed overseas) for six weeks, we also lose the CSHC (and any other benefits IF we ever qualified for a part pension).
Is this correct?
A departmental spokesman says that:
Holders of a Commonwealth Seniors Health Care Card (CSHC) are able to travel overseas for up to 19 weeks without losing entitlement to the card.
To be eligible for a CSHC, an individual must – among other things – not be eligible for a Department of Human Services or Department of Veterans’ Affairs payment. This ingame cludes the Age Pension.
An individual who is eligible for a part Age Pension would re- ceive the Pensioner Concession Card (PCC), not the CSHC. For more information on eligibility for the CSHC see https:// www.humanservices.gov.au/ customer/services/centrelink/ commonwealth-seniorshealth-card.
In regards to the PCC, when the individual returns to Australia, if they are still entitled to a pension, their PCC will be automatically reactivated.