Warn­ing bells are ring­ing

Money Magazine Australia - - ASK PAUL -

Q

My sis­ter and I have jointly in­her­ited a small unit in cen­tral Syd­ney from our grand­mother. She bought it in the 1970s. It has been val­ued at $575,000 and earns about $1200 a month in rent. My sis­ter and I have com­pletely dif­fer­ent fi­nan­cial cir­cum­stances. I am a fairly se­nior pub­lic ser­vant in a de­fined ben­e­fit su­per scheme. She has had health is­sues that are likely to be on­go­ing and re­ceives a dis­abil­ity pen­sion. I have three kids; at this stage she has none. She owns her own house out­right; I have a sub­stan­tial mort­gage. We are in our mid-40s.

We are in­clined to keep the unit as we think cen­tral Syd­ney prop­erty is a good in­vest­ment. We were won­der­ing if setting up a joint self-man­aged su­per fund and trans­fer­ring the unit ti­tle to it could be an op­tion. The ben­e­fit would be re­duced tax payable on the rent for me and my sis­ter’s dis­abil­ity pen­sion wouldn’t be im­pacted. We would rein­vest the rent for our fu­ture re­tire­ment. Is this an op­tion for us?

As the ro­bot on Lost in Space was fond of say­ing, “dan­ger, dan­ger”. This is a se­ri­ously com­plex ques­tion, with a po­ten­tially so­phis­ti­cated idea. So here the ro­bot’s words are ring­ing out to me.

The an­swer needs you both to meet with a well-qual­i­fied, fee-charg­ing ad­viser. Your sit­u­a­tions are so dif­fer­ent and I hear alarm bells ev­ery­where.

About all I can say with­out po­ten­tially mis­lead­ing you is that I do agree about the prop­erty. Cen­tral Syd­ney is a great place to own prop­erty with a long-term view, so un­less it had par­tic­u­lar is­sues I would also try to hold it.

As for tax and le­gal struc­tures, please seek out a pro­fes­sional ad­viser.

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