Retire with a rental property – or more in super

I AM 60 and plan to retire in 18 months with a super balance of $600,000. I am single and own my own home. I have an investment property worth $750,000 with $200,000 owing. Which is the better scenario:

Keep it and take $200,000 from super when I retire to pay it off, leaving $400,000 in super plus a rental income of $24,000pa, or sell it and put $300,000 into super (leaving approximately $250,000 to spend and invest outside super?

If I sell it and put $300,000 (the maximum allowed) into super, will that make me eligible for a Centrelink part pension?

Obviously, the best strategy depends somewhat on the potential of the investment property, and what capital gains tax may be payable if you sell it.

However, if you think the property has potential I believe your best option is to hold it, and keep the loan going. If the interest rate on the loan was 6 per cent you would still have a healthy cash surplus and would have more assets working for you as you would not have to withdraw $200,000 from super. Keeping the property also gives you the benefit of diversification.

In view of your assets, you are not eligible for any age pension under the current rules, which are more likely to be tightened than loosened by the time you get to pensionable age. The downsizing proposals have no Centrelink benefits because once you reach pensionable age, money in super is counted.

MY father is 93 and owns his home, which is worth $600,000, plus he has approximately $100,000 in cash and shares.

He is considering giving one of his children, my brother, $50,000. Would this have any effect on his pension?

Once the gift was made $10,000 would cease to exist for Centrelink purposes, and the remaining $40,000 would be subject to the deprivation rules for the next five years and be subject to deeming. However, he should be receiving the full pension now because his assets are well under the threshold – therefore the gift should have no effect on his pension. RECENTLY you gave an answer to a couple who had willed $85,000 super to their children. You mentioned they could withdraw the super and invest in their own name to avoid the children paying tax. I am in the same position and am not sure what you meant.

There is a death tax of 15 per cent plus Medicare levy on the taxable component of superannuation that is left to a non-dependent. However, it is possible to avoid the death tax if the money is withdrawn from superannuation tax-free, prior to the death of the deceased. Obviously expert advice should be taken before this is done.

The gift of $50,000 to his child should have no effect on his pension