ASK NOEL

I'm 61 and my only income is a disability pension. I don't have any super. I owe under $20,000 on my home, worth $300,000. It's in an area with limited employment opportunities and poor public transport so I was considering letting the house out and renting a small unit closer to public transport, hoping to secure some part-time work. I'm reluctant to sell because of current market conditions and because it was difficult to buy a home on a disability pension. If I rented the house out, would the rental income be counted by Centrelink? If I sold when the market picked up, would I be charged capital gains tax?

The rental income would be assessed by Centrelink but costs such as interest, rates and maintenance would be deducted before the final figure is struck. As you can be absent from your home for up to six years without losing the main residence CGT exemption, it's unlikely that capital gains tax will be an issue.

I'm 60 and planning on retiring soon. Upon retirement, my superannuation fund will invest my funds as I direct. They offer international shares, Australian shares, cash or a mix of these. What do you suggest?

You need to sit down with your adviser and agree on an asset allocation that fits your risk profile and goals. You will need to review this on a regular basis and make adjustments as necessary. For example, if the Australian share-market roared, the proportion of your portfolio held in Australian shares may exceed your set percentage and you may then decide it's time to take profits to return your portfolio to the original asset allocation.

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.