Keep property separate

I am 52 and have an investment property worth about $320,000 (mortgage $60,000). I would like to transfer the property to my personal super fund. Could you please advise what costs I would have to pay, other than legal costs? Am I up for stamp duty, capital gains, etc? Is it a sensible idea? A.N.

If this is a residential property, then you cannot sell it into your self-managed super fund (SMSF). It is a big no-no under super regulations. If, instead, it is a real business, commercial or retail property (or even a home used solely for commercial purposes, such as a doctor's surgery), then you can go ahead and the transfer is treated as a standard sale on your part and a purchase by the SMSF, with normal CGT and stamp duty payable. Note that in Victoria, such a transaction is exempt from stamp duty if deemed to be an in-specie transfer, with no change in beneficial ownership.

Anything but a loan

My husband is 71 and I am 65, both retired. We sold our farm, run as a company, in 2004 for $2.4 million, which was, at the time, our only asset. We live in my previous marital home. We have since given two children $300,000 each to buy a home. Also we have bought three investment properties, two in joint names and one in the company's name. We are dependant on rental income and the interest on $1 million invested in cash in the company name. Because we paid for the jointly owned properties with company money, we have been advised to mortgage one to our company over 25 years to repay money we had no entitlement to. My husband hasn't borrowed money since 1968 and is not happy with this outcome. Is the advice given by our tax agent accurate? N.A.

A company is a separate tax entity and if it gives you money to buy a property, then it is either repaying a loan, returning capital, extending a loan or paying a dividend. It sounds as though only the latter two courses are available to you and your tax agent has decided it is cheaper for you to borrow money from the company rather than to claim the 2004 payment as a dividend.

It's a complex matter, dependant on the sources of capital within your company. If you're not happy with the advice, get a second opinion but make sure you take in all the data about when the company was set up and where its original money came from.

Minimum withdrawals

MY wife and I have an SMSF, we are retired and drawing pensions from the fund. The rules state the minimum one must draw from the fund is 5 per cent of the fund value as at the beginning of the financial year. The result is that to comply with the 5 per cent rule - our income having come down with rate reductions - we may have to liquidate securities at a time when market prices are poor, even though it may be more prudent to wait for an upturn. Is there any way to solve this problem? J.S.

Yes, the Government has halved the minimum amount that you need to take from the super fund, thus reducing your minimum pension to 2.5 per cent for 2008-09. At this stage, there is no indication that this will be extended past June 30.

Ready to roll-over

I have an AMP Endowment/Superannuation policy that was taken out in 1986, which matures this month with a value of about $45,000. I will be 60 in August and still work part-time - about 25 hours a week as a clerk. I also have an employer industry superannuation fund (MTAA) with a current value of $84,000. I switched this to the cash option in November last year. Should I roll the AMP amount into the industry super fund in April or should I leave it in the AMP Retirement Savings Account at about 2.81 per cent, which is capital guaranteed. Also, if I retired in about three to four years, would I be eligible for a part pension? V.K.

With any luck the sharemarket has seen its low, although it is likely to suffer more volatility, especially if the US car makers GM and Chrysler go into bankruptcy. I suspect that, in the years following the crisis, the stockmarket is likely to make strong returns. Given that you have another three to four years to go, I would suggest rolling it over into your MTAA funds, choosing the balanced option if you want to be conservative, and plan to later place some into the Australian shares fund. And yes, you will certainly be eligible for a single age pension.

If you want to work beyond your age-pension age (currently 65 for men and, by January 2014, 65 for women as well), be sure to register for the Pension Bonus Scheme.

If you have a question for George Cochrane, send it to Personal Investment, PO Box 3001, Tamarama, NSW, 2026. Helplines: bank ombudsman 1300 780 808 pensions 13 28 00