Asset test relief for pensioner going into care
YOUR ADVICE
MY mother has just been diagnosed with dementia and has gone into aged care.
Her unit is worth around $700,000 and she has around $250,000 of which most will go in the form of a bond.
We read with interest your recent article on keeping the family home as it’s exempt for two years from the assets test, but can you clarify if the $162,087 you mentioned is the maximum assessable value of a property for life? Also can family members live in it rent free without any implications?
The home would be exempt from your mother’s pension assessable assets for two years from the date she enters care.
After this it would be included, but she would be assessed as a non-homeowner with the benefit of the higher asset threshold.
The home is included for the aged-care means test up to a maximum value of $162,087 unless a protected person is living there (in which case it is exempt).
I AM 60 and no longer working. My taxable income is around $46,000 from super, shares dividend and rental income. I will be selling an investment property soon to pay off my mortgage and expect to have to pay a substantial capital gains tax on the property.
I would like to contribute some of the profits to my superannuation account. I understand that the maximum amount I can contribute is $25,000 annually. In your column recently you mentioned the bring-forward provisions, which enable contributions of up to $300,000. Am I eligible for this?
You are eligible to contribute $25,000 of concessional (taxdeductible) contributions and $100,000 a year in nonconcessional (non-deductible) contributions. The latter, could be expanded to $300,000 if you use the three-year bringforward rule.
Just keep in mind that a non-concessional contribution is not tax deductible so will not reduce the capital gains tax.
MY wife and I have utilised a $35,000 equity loan towards purchasing shares over the past two years.
The total portfolio value is now $90,000. Is it better to pay down the investment loan with my future work bonuses or purchase more shares from these bonuses and allow the dividends to naturally pay down the investment loan as the portfolio grows?
The investment loan rate is 5.1 per cent.
The name of the game is to maximise your tax-deductible debt while minimising your non-deductible debt.
Therefore, I suggest any cash you earn be set aside for future purposes such as buying your own residence if you don’t have one now, and you continue to build your wealth in shares by increasing the borrowings for those shares as the portfolio grows.
Make sure you reinvest all dividends to maximise the compounding effect.
Noel Whittaker is the author of
and other finance books. His advice is general in nature and readers should seek their own professional advice before making any financial decisions. Email: noel@noelwhittaker.com.au