Plan to downsize and retire at 60
Having done well with property, Rohan has a ...
QI currently have an investment property in Cheltenham, Melbourne, which was purchased for $210,000 and is now worth around $1 million, with a loan of $500,000. In nearby Black Rock I have my own home which still has a substantial loan against it (around 40% LVR) and also an SMSF holding another townhouse which has around $450,000 equity.
I am 49 and looking at a 10-year retirement plan. I am wanting some advice as to whether I sit and hold all properties until retirement or sell my Cheltenham house, take a CGT hit now and deposit the equity I come out with into my SMSF to buy another property that will be CGT free at 60 years of age?
At 60 my plan is to downsize our home and purchase a smaller house in Melbourne and also look at purchasing a property on the Sunshine Coast to escape the Melbourne winters.
Rohan, I know what you mean about escaping the winter. As I write this, I am on a flight from a very warm and sunny Magnetic Island to a chilly Sydney. Wow, your Cheltenham investment property has been a cracker. I am not too sure why it was bought for $210,000 and has a loan of $500,000. Did you do a renovation? The townhouse in your SMSF has also done very well.
While I really think you need an hour or two with an adviser to get the quality of answer you need to make decisions,
I can say that I am not keen on you selling a property that has done so well. My view on investments is pretty simple. If a property has done well it is telling us it is in a good growth location. I don’t see why that would change.
Again, as a general principle the idea of paying tax now and reducing your asset base, plus significant sale costs, is really unattractive. I get your point about then reinvesting in your SMSF so future CGT past 60 is tax free but you would have to run the numbers with an expert.
But, regardless, I would like you to use the next decade to build assets that are not property. As we are seeing now, at times property will go backwards. At retirement we all do need to hold a mix of asset classes.