Personal Finance
Newcastle Herald
Thursday January 1, 2009
Q My husband and I want to buy a bigger home for our family and see the current market as an ideal time to buy. But we don't believe it is a good time to sell. We are wondering if we should keep our existing house, rent it out and use the rent to meet the mortgage repayments, or sell the house CGT-free while we can? But how quickly do we need to sell our old home after buying a new house to ensure it is CGT-free?
A Remember you buy and sell in the same market. If you are moving from a cheaper house to a more expensive one you will almost certainly be better off to drop the price of the existing house for a quick sale and then make up the difference by driving a hard bargain with the property you want to buy. For example, if your present house is worth $500,000 and you are buying one for $900,000 a reduction of $75,000 in yours may enable you to get a reduction of $150,000 in the one you are buying. Make sure you research the market. There is no point in dropping your property for a quick sale if what you want is unavailable.Q Our new interest rate on our home loan is 6.86 per cent. The balance on our home loan is $331,000 with a limit of $344,000. At the moment we are paying off $650 a week, which is more than required. What is the ideal amount of time in which to pay off a home loan and why? How much should our repayments be per week if we were going to pay off the loan at the ideal rate?A Your present repayments are equal to $2816 a month, which will have the loan paid off in 16 years and you will pay a total of $216,000 in interest. My optimum repayments are $12 a thousand, which would be $3972 a month or $914 a week on your existing loan. If you could afford payments at this level the term of the loan would drop to 91/2 years and you would pay just $120,000 in interest. I appreciate you may not be able to afford payments at this level, so just continue to pay as much as you can. Q I recently had brought to my attention an article that referred to budget changes affecting commonwealth seniors health card holders. Specifically, the article referred to withdrawals from superannuation being captured by the new definition of income. However, I am not sure whether "withdrawals" includes account-based pensions or only cash withdrawals. Can you clear this up for me? A To qualify for a CSHC, a person must make a claim for the card, and meet the following criteria: they must not be receiving an income support payment from Centrelink or the Department of Veterans' Affairs; they must be of age pension age; they must have an annual adjusted taxable income of less than $50,000 for singles or $80,000 for couples (combined income) (note, $639.60 per year is added for each dependent child); and they must be an Australian resident or special category visa holder. From July 1, 2009, the adjusted taxable income for a person's tax year will be the sum of the following: taxable income, employer provided benefits, target foreign income, net rental property loss, income from a superannuation income stream with a taxed source, including lump sum withdrawals, income that is voluntarily salary-sacrificed to your superannuation and net financial investment loss.Send your questions to noelwhit@gmail.com. Readers should seek their own expert advice before making financial decisions.
© 2009 Newcastle Herald