5 hours ago
2
June 3, 2026 — 5:00am
I’m 48 and had planned to buy an investment property, but after the recent tax changes, I’m no longer sure it stacks up. Looking at the numbers, it seems I would still be heavily out of pocket each year, even after rental income, interest, maintenance and other costs are considered. I estimate the shortfall could be about $30,000 a year.
I’m now wondering whether I would be better off investing the same amount over the next 12 years into shares or ETFs, or, alternatively, making extra superannuation contributions. If you had to choose between investing in shares outside super and putting more into super, which would generally make more sense? I’m also interested in the trade-off between flexibility and access to money with shares, versus the tax advantages of super.
I agree that shares or ETFs may now be more attractive than an investment property, particularly if the proposed tax changes proceed. Your estimate of a $30,000 annual shortfall sounds realistic.
Superannuation is probably the optimum long-term investment vehicle because of its tax advantages. The drawbacks are that your money is generally inaccessible until at least age 60 and there are limits on contributions.
In your situation, I would first maximise concessional contributions – the tax-deductible ones. In this financial year, the cap is $30,000, including employer contributions, rising to $32,500 after June 30. Keep in mind that super is simply a structure that holds investments, so you can still invest in shares, ETFs and similar assets inside super.
The drawback of investing outside super is that earnings and capital gains are taxed at your personal tax rate. Given that investments outside super are usually made from after-tax dollars, a better strategy may be to contribute surplus funds to super as non-concessional contributions.
Just make sure you always keep enough money outside super for emergencies and contingencies.
My wife and I are retired and financially comfortable, and we would rather see our money helping our grandchildren now than later. We have already given our three working grandchildren $50,000 each towards a future home purchase and plan to provide a further $100,000 each when they buy.
We are unsure whether it is better to give the money before purchase to increase the deposit and reduce the loan, or after settlement by placing it into the loan account as a financial buffer. We have been debt-free for many years and are unfamiliar with modern lending arrangements. Which approach is likely to work best?
I would generally prefer to see the money given before they take out the loan because if the deposit is less than 20 per cent of the purchase price, they may have to pay expensive lenders mortgage insurance. Your gift could eliminate that cost altogether.
However, if the loan-to-value ratio is already below 80 per cent, mortgage insurance would not apply anyway. In that case, another strategy may be for them to have a loan with an offset account, while you keep your money in the offset account. This reduces the interest charged on the loan while still allowing access to the funds if circumstances change.
I am 75 and receiving the age pension. I am about to inherit $140,000 from my late mother and would like to give $25,000 to each of my four children. Would this affect my pension, and would my children pay tax on the gifts? I own my home and have about $160,000 in other assets. I am single.
A single homeowner can have assets of up to $321,500 before the age pension starts to reduce under the assets test. Assuming your total financial assets rise to about $260,000 after the inheritance, your pension would probably only reduce slightly under the income test because of deemed income.
Your children would not pay tax on the gifts. However, Centrelink gifting rules apply. Amounts above the allowable gifting limits continue to count as your assets for five years before disappearing for pension purposes.
I would appreciate your guidance regarding a property I have owned since 1983. It was my principal place of residence until 2017, when I moved into my parents’ home to care for my disabled brother until his death in 2023. From 2017 to the present, the property has been rented for most of the time, apart from the period between 2020 and 2022 when I lived in a granny flat on the property while the remainder was leased.
In 2023, following the deaths of my mother and brother, I inherited the family home and continue to live there now. My question relates to the pre-1985 property, which I understand was previously exempt from CGT. I also understand the proposed changes from July 1, 2027, may affect that exemption.
This property has deep family significance. It was originally built by my great-great-grandfather in 1889 and sold out of the family in 1896, and I was able to bring it back into family ownership when I purchased it in 1983. Ideally, I would like to leave it to my daughter and would appreciate your guidance on the possible CGT implications of doing so.
Julia Hartman from BANTACS advises that, under the proposed changes, the property will effectively acquire a new cost based on its market value at July 1, 2027.
From that date onward, it will be important to keep careful records of all expenditure relating to the property because eligible costs such as improvements, legal fees, holding costs not otherwise claimed as a tax deduction and other capital expenses may increase the cost base and help reduce any future capital gain.
There is another important issue. Any structures added after September 19, 1985, such as the granny flat, may already be treated as separate post-CGT assets under existing law, even though the original property itself was acquired before CGT began. That means those improvements may already be subject to CGT rules.
Under the current law, when somebody inherits a pre-CGT asset, the beneficiary generally receives a cost base based on the market value at the date of death. However, if the proposed changes proceed, I would expect that concession to disappear.
Instead, your daughter would most likely inherit the property using your existing cost base, ie market value at July 1, 2027 which could create a significant future CGT liability if the property continues to rise in value over time.
Noel Whittaker is author of Retirement Made Simple and other books on personal finance. Questions to: [email protected]
- Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.
Expert tips on how to save, invest and make the most of your money delivered to your inbox every Sunday. Sign up for our Real Money newsletter.
