Sharing the wisdom of Whittaker

Finance author Noel Whittaker. Source: Supplied

THIS week investment expert Noel Whittaker answers your questions on investment properties and super funds.

Q: IN RELATION to the age pension, will Centrelink assess, as an asset, an investment property that will become our primary residence before we retire?

A: While the property is rented out, it will be treated by Centrelink as an investment property. Once you occupy it, it will become an exempt asset.

Q: WE ARE both 40 and have a combined income of $110,000. Our home is valued at $370,000 with a mortgage of $40,000 and we have $25,000 in an offset account. We both have small share portfolios that we are working on building. Our home would rent for between $300 to $350 a week. We would like to buy a second property either to live in as an upgrade to our existing home (our preference) or to rent out. For tax purposes, would it be better to pay off our existing home and save a deposit for the second property, or keep the mortgage on our existing home, save or redraw the deposit for the second property and then move in to it? We must hold the mortgage for another two years.

A: You should be trying to maximise your deductible debt while minimising your non-deductible debt. However, you have a very small mortgage on your home, so it would be futile for tax purposes to rent it out. Your two options are to continue to live where you are, and take out a large loan to buy a rental property, or to sell your present house, use the proceeds to buy another to live in, and then borrow back for an investment property.

Q: WE HAVE a self-managed super fund and fear we are a little heavy on shares and corporate bonds. How can retail shareholders buy Australian Government bonds? I know there was talk some time back of making it easier or more direct. Do we have to buy though a managed fund that only holds Australian Government bonds or is there some other mechanism?

A: If you go to the Reserve Bank website (rba.gov.au), you will find a wealth of information on buying government bonds. The big decision for you is whether such a buy is appropriate given their present low yields.Noel Whittaker is the author of Making Money Made Simple and other finance books. His advice is general in nature and readers should seek their own professional advice before making any financial decisions. Email: noelwhit@gmail.com.

View the original article here

Sharing the wisdom of Whittaker

Finance author Noel Whittaker. Source: Supplied

THIS week investment expert Noel Whittaker answers your questions on investment properties and super funds.

Q: IN RELATION to the age pension, will Centrelink assess, as an asset, an investment property that will become our primary residence before we retire?

A: While the property is rented out, it will be treated by Centrelink as an investment property. Once you occupy it, it will become an exempt asset.

Q: WE ARE both 40 and have a combined income of $110,000. Our home is valued at $370,000 with a mortgage of $40,000 and we have $25,000 in an offset account. We both have small share portfolios that we are working on building. Our home would rent for between $300 to $350 a week. We would like to buy a second property either to live in as an upgrade to our existing home (our preference) or to rent out. For tax purposes, would it be better to pay off our existing home and save a deposit for the second property, or keep the mortgage on our existing home, save or redraw the deposit for the second property and then move in to it? We must hold the mortgage for another two years.

A: You should be trying to maximise your deductible debt while minimising your non-deductible debt. However, you have a very small mortgage on your home, so it would be futile for tax purposes to rent it out. Your two options are to continue to live where you are, and take out a large loan to buy a rental property, or to sell your present house, use the proceeds to buy another to live in, and then borrow back for an investment property.

Q: WE HAVE a self-managed super fund and fear we are a little heavy on shares and corporate bonds. How can retail shareholders buy Australian Government bonds? I know there was talk some time back of making it easier or more direct. Do we have to buy though a managed fund that only holds Australian Government bonds or is there some other mechanism?

A: If you go to the Reserve Bank website (rba.gov.au), you will find a wealth of information on buying government bonds. The big decision for you is whether such a buy is appropriate given their present low yields.Noel Whittaker is the author of Making Money Made Simple and other finance books. His advice is general in nature and readers should seek their own professional advice before making any financial decisions. Email: noelwhit@gmail.com.

View the original article here

Sharing the wisdom of Whittaker

Finance author Noel Whittaker. Source: Supplied

THIS week investment expert Noel Whittaker answers your questions on investment properties and super funds.

Q: IN RELATION to the age pension, will Centrelink assess, as an asset, an investment property that will become our primary residence before we retire?

A: While the property is rented out, it will be treated by Centrelink as an investment property. Once you occupy it, it will become an exempt asset.

Q: WE ARE both 40 and have a combined income of $110,000. Our home is valued at $370,000 with a mortgage of $40,000 and we have $25,000 in an offset account. We both have small share portfolios that we are working on building. Our home would rent for between $300 to $350 a week. We would like to buy a second property either to live in as an upgrade to our existing home (our preference) or to rent out. For tax purposes, would it be better to pay off our existing home and save a deposit for the second property, or keep the mortgage on our existing home, save or redraw the deposit for the second property and then move in to it? We must hold the mortgage for another two years.

A: You should be trying to maximise your deductible debt while minimising your non-deductible debt. However, you have a very small mortgage on your home, so it would be futile for tax purposes to rent it out. Your two options are to continue to live where you are, and take out a large loan to buy a rental property, or to sell your present house, use the proceeds to buy another to live in, and then borrow back for an investment property.

Q: WE HAVE a self-managed super fund and fear we are a little heavy on shares and corporate bonds. How can retail shareholders buy Australian Government bonds? I know there was talk some time back of making it easier or more direct. Do we have to buy though a managed fund that only holds Australian Government bonds or is there some other mechanism?

A: If you go to the Reserve Bank website (rba.gov.au), you will find a wealth of information on buying government bonds. The big decision for you is whether such a buy is appropriate given their present low yields.Noel Whittaker is the author of Making Money Made Simple and other finance books. His advice is general in nature and readers should seek their own professional advice before making any financial decisions. Email: noelwhit@gmail.com.

View the original article here

Noel Whittaker answers your questions

Finance author Noel Whittaker Source: Supplied

Noel Whittaker offers investment advice to YourMoney readers.

Q: MY SUPERANNUATION is invested in a diversified fixed interest fund and is doing quite well. I don't understand what can affect the returns - interest rates have been low across the world, yet the returns are very good. I understand it is in bonds or something similar. I would like to know what will make the returns rise and fall.

A: Funds that invest in fixed interest do well when interest rates are falling because the interest rate is fixed. They do poorly when rates start to rise and could even give you a capital loss. I'm concerned that you hold all your super in one asset class. You should be taking advice about moving to a more diversified portfolio.

Q: MY HUSBAND and I bought a block of land through a line of credit loan about three years ago, with an intention to build. We have now decided to sell it as we have not been able to sell our current property. We read the advice you recently gave to another couple in a similar situation and wondered if we could claim back the interest, rates and other costs we have paid while holding on to the block. If we sell our current home and then sell the land, will the same apply?

A: Provided the property was bought after August 20, 1991, you can claim expenditure such as rates, maintenance and interest. The timing of the sale of your home is not relevant.

Q: I AM 65, will be retiring shortly, and am wondering which of the following options is best as I am a cautious investor. I could withdraw super out of my retail fund and generate tax-free interest in bank term deposits, then transfer the balance to my wife's super as she will be 65 in two years. We would live off funds from the term deposits plus a part Centrelink pension. The Health Care Card is important to us. Is this a smart move considering my wife's super will attract a 15 per cent tax loading?

A: Ask your adviser to do the numbers. You need to weigh up the tax that may or may not be payable against what you would receive from Centrelink. Keep in mind that the situation will change when she turns 65.

Noel Whittaker is the author of Making Money Made Simple and other finance books. His advice is general in nature and readers should seek their own professional advice before making any financial decisions. Email: noelwhit@gmail.com.

View the original article here

Noel Whittaker answers your questions

Finance author Noel Whittaker Source: Supplied

Noel Whittaker offers investment advice to YourMoney readers.

Q: MY SUPERANNUATION is invested in a diversified fixed interest fund and is doing quite well. I don't understand what can affect the returns - interest rates have been low across the world, yet the returns are very good. I understand it is in bonds or something similar. I would like to know what will make the returns rise and fall.

A: Funds that invest in fixed interest do well when interest rates are falling because the interest rate is fixed. They do poorly when rates start to rise and could even give you a capital loss. I'm concerned that you hold all your super in one asset class. You should be taking advice about moving to a more diversified portfolio.

Q: MY HUSBAND and I bought a block of land through a line of credit loan about three years ago, with an intention to build. We have now decided to sell it as we have not been able to sell our current property. We read the advice you recently gave to another couple in a similar situation and wondered if we could claim back the interest, rates and other costs we have paid while holding on to the block. If we sell our current home and then sell the land, will the same apply?

A: Provided the property was bought after August 20, 1991, you can claim expenditure such as rates, maintenance and interest. The timing of the sale of your home is not relevant.

Q: I AM 65, will be retiring shortly, and am wondering which of the following options is best as I am a cautious investor. I could withdraw super out of my retail fund and generate tax-free interest in bank term deposits, then transfer the balance to my wife's super as she will be 65 in two years. We would live off funds from the term deposits plus a part Centrelink pension. The Health Care Card is important to us. Is this a smart move considering my wife's super will attract a 15 per cent tax loading?

A: Ask your adviser to do the numbers. You need to weigh up the tax that may or may not be payable against what you would receive from Centrelink. Keep in mind that the situation will change when she turns 65.

Noel Whittaker is the author of Making Money Made Simple and other finance books. His advice is general in nature and readers should seek their own professional advice before making any financial decisions. Email: noelwhit@gmail.com.

View the original article here