We’re 71 with no super. Should we sell our house and invest the proceeds?

We are a couple, both aged 71, currently receiving the full age pension of about $890 each per fortnight. We have no superannuation savings and only about $12,000 in the bank. We are considering selling our home for around $710,000 and are weighing up two options. The first is to downsize into an apartment worth about $550,000. The second is to sell the home and keep the proceeds in liquid investments, such as superannuation or an account-based pension, to avoid the stress of buying and maintaining another property.

Our children favour the second option, particularly because I have been a bladder cancer survivor for the past 12 months, and they are concerned about our future care needs. Our main concern is how these choices would affect our age pension, and whether it could be reduced or cancelled.

I think your main concern should be finding accommodation that suits your lifestyle and ensures you have enough capital to last for the rest of your lives. As a non-homeowner couple, you can have assessable assets of up to about $1.34 million and still qualify for a part age pension, together with all the valuable concessions that come with it.

If you move to an apartment or a retirement lifestyle community, upkeep and maintenance should be far less of an issue, while still giving you security and certainty of tenure. You would also avoid the stress of having all your assets invested in markets, where values and income can fluctuate.

Based on the figures you have provided, buying a $550,000 apartment would almost certainly allow you to retain the full age pension, or very close to it. Even if you sold the home and kept the proceeds invested, you would still remain well under the non-homeowner assets test limits and be entitled to a part age pension.

Take your time exploring both options. This is as much a lifestyle and health decision as a financial one, and it would be wise to obtain expert financial advice before making a final decision.

Where there is more than one beneficiary, complications can arise if one wants to keep the shares while another would prefer cash.

My main residence is in Melbourne, my investment property is at the beach. In November 2024, I rented out Melbourne and moved permanently to the beach. I plan to sell the Melbourne apartment next year to help the kids. Will I have to pay CGT on Melbourne because it will have been rented for two years?

Julia Hartman of Bantacs says you can elect to keep the Melbourne property covered by your main residence exemption for up to six years while it is rented, so no CGT will be payable, provided it has always been your main residence.

Of course, you cannot cover the beach house with your main residence exemption during that time. The key is to ensure the beach house is fully covered by your main residence exemption at the date of your death.

If it is not earning income then, your heirs inherit it at market value at date of death, so the CGT liability is effectively wiped. They then have up to two years to sell without triggering CGT. If they exceed two years, the CGT calculation starts from the market value at date of death.

It does not count as earning income for this purpose if you are renting it out but still treating it as your main residence under the six-year rule, for example while in aged care.

I’m 41, female, live alone, and earn about $150,000 a year, and I don’t expect my salary to rise. Last year I bought my home and now have a $400,000 mortgage, with $50,000 in savings sitting in the offset account. I have no other debt, my super balance is $230,000 in a defined benefit fund, and I have an old second-hand car that’s about to die. After living expenses and mortgage payments I can only save about $5000 a year, which I currently add to my offset account.

As I move into my 40s, I’m starting to worry that I may not be doing enough to prepare for retirement, but I’m also conscious of needing cash available for short-term expenses as a single homeowner. Given my situation, would it be wiser to prioritise building the offset balance, salary sacrifice more into super, or start investing outside super (for example, in shares or ETFs), and what strategy would give someone in my position the best chance of improving their long-term financial security?

I think prioritising the offset account is a sound strategy because you are effectively earning a capital-guaranteed return equal to your mortgage rate – around 6 per cent – while keeping the money fully accessible. That flexibility is important given your situation.

Once you have a comfortable buffer in the offset, you could then consider gradually increasing salary sacrifice into super to take advantage of the tax concessions. Your defined benefit fund already provides a solid base, so there is no urgency to divert limited cash flow away from accessible savings.

As you get closer to retirement, you can shift the focus to boosting super, with the aim of having a balance that at least matches your mortgage.

If shares are left to beneficiaries under a will, is it generally better to transfer the shares directly into their names rather than sell them within the estate? My understanding is that any capital gains tax is usually deferred until the beneficiary eventually sells the shares. Is that correct, and are there situations where selling the shares before death could actually be the better option?

There are several issues to consider here. The first step is to ask the beneficiaries what they would actually want to do if they inherited the shares because any embedded capital gains tax liability normally passes with the shares.

That may not worry a beneficiary who intends to keep them long term, but it could become an issue for somebody on a high marginal tax rate who plans to sell them quickly.

Where there is more than one beneficiary, complications can arise if one wants to keep the shares while another would prefer cash. In situations like that, it may be worth considering whether some of the shares should be sold while you are still alive, particularly if you are currently on a lower marginal tax rate than the beneficiaries may face in the future.

Every estate is different, so the best strategy will depend on the beneficiaries, their tax positions, and the structure of the estate.

Noel Whittaker is author of Retirement Made Simple and other books on personal finance. Questions to: noel@noelwhittaker.com.au

• Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

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