We're planning to travel overseas for six months next year and would like to rent out our home while we're away. Is the interest I pay on my home mortgage tax deductible in that period? Am I exempt from capital gains tax?
Once the property is available for rent, all outgoings, including interest, will be tax deductible and rents will be assessable. I recommend you get a depreciation report from a quantity surveyor to maximise your tax deductions. You can be absent from your house for up to six years without losing the CGT exemption.
I'm a 56-year-old female earning $76,000 a year. I have $39,000 in super, a mortgage of $320,000 on a property worth $480,000, but no other assets. I can afford to salary sacrifice $13,000 a year into my super, or pay an equivalent after-tax amount extra payment into my mortgage. Which would you advise me to do? If I do the former and continue to pay the minimum on my mortgage, can I take the lump sum from my super and pay off my mortgage and still qualify for the aged pension when I retire at 65?
I prefer that you salary sacrifice into super, because such contributions lose just 15 per cent, whereas money in your pay loses 32.5 per cent. Because of your age, you have no worries about access to your funds, and when you retire after 60 you can withdraw as much as you wish tax-free. This would have no adverse effect on your Centrelink benefits once you reach pensionable age.
I'm 71, have worked all my life, raised three children and paid all my taxes. We own our home, but I have just $25,000 in super. My partner is younger, earns a reasonable salary, and will be working for some time. I've contacted Centrelink and have been told I'm not eligible for the pension or a health card. At this rate I will be 80 before I receive the pension.
I know many people who have large super balances, shares, own their homes and receive the aged pension - how does this work?
If your wife is earning more than $67,537 a year, you will be ineligible to receive an age pension because of the income test. I assume this is the reason you do not qualify, because on the information provided you are eligible under the assets test. I suggest you try to obtain some casual work - this will enable you to be in control of your own income again.
My wife and I are in our 30s with two young children. Our combined income is $300,000 a year. We'd like to minimise our tax burden by purchasing a property. We've no interest in traditional investment properties, but would love to have a beach house to use on weekends. Is it possible to have a holiday home that is available for us to use but is also a tax deduction? If so, how could this be achieved?
You aren't going to minimise your tax burden very much by purchasing an income-producing property, as the income from that property will tend to negate the tax deductions you would receive through negative gearing. You can certainly treat a beach home as an investment property, but your tax return will need to be adjusted for the time the property is used for private purposes. This will usually be during school holidays, when rents are highest. You are better off to rent a holiday home when needed and look at other investment options. This will give you more flexibility, and almost certainly much better long-term returns.
Noel Whittaker is the author of Making Money Made Simple and numerous other books on personal finance. His advice is general in nature. Readers should seek their own professional advice before making decisions. Email: email@example.com.