ASK NOEL

All investment bonds are eligible for the 30 per cent tax rebate. These are tax-paid managed funds, like super, and are different from Commonwealth bonds, which are a fixed-income security. Being a retiree, get advice before placing funds into investment bonds, as doing so may put you at a disadvantage for tax purposes. This is because most retirees don't pay tax. A benefit of investment bonds for retirees is they cannot be challenged under your will. They are ideal for estate planning.

We want to sell our unit worth $440,000, then pay off the mortgage and debts. Our idea is to save as much as we can to buy a house in two or three years' time. Meanwhile, we are thinking of renting. What do you think about our plans? If we keep $40,000 in our bank account what happens with the tax?

Your strategy will cost you at least $50,000 in changeover costs but if your heart is set on living in a house, and not a unit, there is no reason why you should not bite the bullet now. The best place for your savings would be a high-interest online account the interest will be taxable but will not have much impact on your tax position due to the current low interest rates. Keep it in the name of the lowest income earner to minimise the small amount of tax payable.

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