Renovate or downsize for best outcome?

I am a 72-year-old pensioner and have owned my home for 20 years. I think I qualify for the superannuation downsizer scheme. However I have taken out $30,000 (not taxed), intending to do renovations/upgrades rather than downsize. My question is, would there be any tax issues if I decide to use that money as a deposit on a smaller home and some of the money from the sale of my home to buy smaller. I have spoken to an accountant and he didn’t seem to understand what I was talking about. I also spoke to a financial adviser and was told they couldn’t help, as my holdings are too small and their fees were too costly for me, as I only have a small amount left in super. I understand the deeming implications with Centrelink. A To be eligible for the downsizer contribution to superannuation you need to have lived in your home for more than 10 years and make the super contribution within 90 days of settlement on the sale of the property. That you have taken $30,000 out of superannuation to use as a deposit for a new home, would not prevent you from ultimately making a downsizer contribution upon the sale of your home. The maximum downsizer contribution you can make is $300,000. The withdrawal that you have made from your superannuation fund being tax free, would remain tax free irrespective of what you do with this money.

Q I am in my mid-50s, recently separated and living in a rental property with my adult child. I earn $150,000 per year, have about $400,000 each of super and savings, and expect to get a further $400,000 when my divorce is settled. Please advise on what to do with

this money. Combine it with my savings to buy a home (about $700,000) or add to my super/savings and continue renting? I am hoping to retire at 60 and unsure of the implications of these options for a future age pension.

A Before you consider adding any money to superannuation you need to be well aware of the preservation rules that apply. This means that you would not be able to access the money until you are over 60 and retired from the workforce (or change employer after age 60). If one of your goals is to purchase a home in the near future, I would be suggesting superannuation not be an option considered at this time. Home ownership can offer you some financial security long into the future, but it would mean using a significant amount of your savings. Once you have established yourself financially, that would be the time to seek the advice of a financial planner to view your future retirement goals and objectives. This may include any potential Centrelink income support into the future.

Brenton is a director and an authorised representative of Goldsborough Financial Services Limited. His advice should be considered as an opinion. Readers should consider engaging their own personal financial adviser. Questions and answers may have been edited for length.