Ask Noel

We are in our early 40s, have no children, and our combined gross salaries amount to $185,000. We each have $100,000 in super. Our house is worth $800,000 with a mortgage of $390,000, and we have two investment properties worth $750,000 on which we owe $530,000, earning $38,000 gross rent a year. I have a 50 per cent share in another investment property with my parents and the gross rent is $17,000 a year. This property is worth $400,000 with a mortgage of $234,000. I am thinking of selling the property I own with my parents, taking my share of the profit and using it to pay off some of the mortgage. My wife and I would then salary sacrifice $20,000 into super. Do you think this is a good idea or should I maintain the status quo? My parents are happy either way.

Based on your figures, none of the properties would appear to be costing you very much after the tax deductions have been taken into account. Also, if you did sell the jointly owned property you would be liable for selling costs and possibly capital gains tax. This could take quite a chunk of the sales proceeds. If you believe that the properties have good potential I would simply maintain the status quo you are doing well and, even if you did decide to sell, you are probably better to wait for an upturn in the property market. The fact that interest rates appear to be in down-trend is a factor that will work in your favour.

I am a self-funded retiree and I do not receive any benefits from Centrelink. I would like to help my family by giving a money gift to them. How much can I gift to an individual before becoming eligible to pay tax?

There is no gift tax in Australia so you can gift away as much as you wish. Of course, if you have to cash in assets to find the cash for the gifts, you could be liable for capital gains tax.

You wrote in a recent article about the option of making use of an "actively managed fund". Can you explain what is meant by an "actively managed fund"?

If you wish to invest in shares using managed funds, your main options are to choose an index fund whose performance should mirror the index, or an actively managed fund run by a manager who tries to outperform the index by good share selection. The proponents of index funds point out that they generally have lower fees, and that at least half of the actively managed funds do not beat the index. The proponents of actively managed funds acknowledge generally higher fees but claim that the performance of their fund usually beats the index and so justifies the higher fees. Your adviser should be able to help explain the differences and help you choose a fund that is appropriate for your own situation.

Could you let me know the maximum amount allowed in assets for a couple before the age-pension cuts off?

If you are a home owner, you can have $1,050,000 before you lose eligibility to a part age pension. This figure does not include the value of your home, and money in funeral bonds. Personal possessions such as cars and caravans are valued at second-hand value not replacement value.

I am 63, not working, and I have $140,000 in a super fund. I wish to invest in a term deposit or some safe high-interest account and then return the money to super in say six-12 months. Is this feasible?

It is certainly possible to remove the money from super tax-free and re-contribute it before you are 65. However, I wonder why you need to do it, as you could switch the money to a cash option within super if you were concerned about market movements. However, a benefit of your proposed strategy is that you would be converting $140,000 of the taxable component into the non-taxable component, which would have tax savings if you died and left the money to a non-dependant.

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

I am 28 and will be married in December. I earn $72,000 a year, have $50,000 in a high-interest-bearing account and a HELP debt of $90,000. My fiancee earns about $60,000 a year and is paying off a mortgage of $175,000. We have no other debts but are looking at purchasing a larger home next year. Given that the HELP is income-contingent, do you recommend couples work at knocking off the mortgage, or would it make more sense paying down the HELP debt and getting an extra 5 per cent top-up at the time of payment? I am also interested in spreading into the sharemarket for the sake of diversification. Should we put $5000 into a small share portfolio and build on that over time?

Using part of your money to pay off the HELP debt will give you a higher effective return when the 5 per cent discount is factored in. At this stage in your life I would be focusing on reducing that debt and also the mortgage on the property. You can borrow against the home to invest in shares when you have consolidated your affairs.