InvestSMART

ASK NOEL

I'm a 56-year-old nurse earning $60,000 a year. I have a unit worth $450,000, a mortgage of $160,000 and a share portfolio worth $20,000. I have $300,000 in super. I have a great opportunity through a friend in Florida to invest in a property there. My friend suggests I use some of my super to buy the property, which is a house on quite a bit of land. The asking price is $A135,000, in a good area. What are the pitfalls and benefits of investing in this depressed market?

I'm a 56-year-old nurse earning $60,000 a year. I have a unit worth $450,000, a mortgage of $160,000 and a share portfolio worth $20,000. I have $300,000 in super. I have a great opportunity through a friend in Florida to invest in a property there. My friend suggests I use some of my super to buy the property, which is a house on quite a bit of land. The asking price is $A135,000, in a good area. What are the pitfalls and benefits of investing in this depressed market?

Two investment principles have stood the test of time: don't buy property unless you can visit it easily and don't take financial advice from friends. It's possible to make money on overseas properties but reports I've read indicate numerous pitfalls with American real estate as far as hidden costs go. In view of your age and your relatively low income, you should be extremely careful before committing.

What are the tax implications for investing in a managed share fund versus direct shares? I understand any income from both will be assessable income. When exiting the managed equity fund, is the capital gain subject to capital gains tax (CGT) at my highest income tax rate?

A managed fund will give you diversification you cannot achieve on your own but you need to make sure it does not trade extensively. If it does, you could pay extra tax because the trading will flow to your tax return as assessable capital gains. Managed funds are unit-based and you will pay CGT when you sell on any increase in value between your purchase cost and the redemption value.

Noel Whittaker is a director of Whittaker Macnaught. Advice is general and readers should seek their own professional advice. Contact noel.whittaker@whittaker macnaught.com.au.


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