Should I Sell My House Before Or After I Retire?

Answer

Whether you decide to sell your home or your investment property before or after you retire will depend on your own needs and circumstances.

Thinking ahead and speaking with a financial adviser may help you make the most any opportunities and avoid unexpected financial implications, such as tax obligations and Age Pension entitlements.

When you sell a property, some of the considerations may include:

Taxation

Typically, no capital gains tax applies if the property was your home, but if you sell an investment property you'll generally have to pay capital gains tax.

Providing you've owned the property for at least 12 months, capital gains tax will apply to 50% of the profit but if you've owned the property for less than 12 months, capital gains tax will apply to 100% of the profit.

Centrelink entitlements

The home you live in, and up to two hectares around it aren't assessable under the assets test or income test. But if you sell your home the sale may affect your Age Pension entitlements. That's because the proceeds you receive from the sale of your home are generally not exempted from the Age pension income and asset tests.

If selling your home, some or all of the proceeds you receive may not be counted under the asset test for up to 12 months if you intend using the proceeds toward your new home. But in the meantime, depending on where you hold or invest these proceeds, there may be an amount assessed under the Age Pension income test.

If you are selling an investment property, the money released from the sale will be assessed under the Age Pension assets test. However, as the value of your investment property would have previously been counted under the asset test, there should be little to no impact under the asset test alone. However, depending on where you invest the proceeds, there may now be a higher level of income assessed under the income test.

You can find out more from the Department of Human Services.

Superannuation

Changes announced recently by the government mean that from 1 July 2018, Australians aged 65 and over will be able to make an after-tax contribution to their super of up to $300,000 using proceeds from the sale of their family home – regardless of their work status, superannuation balance, or contribution history.

If you have a partner, both members of a couple will be able to take advantage of this proposal, meaning up to $600,000 per couple can be contributed toward super.

To qualify, the property sold needs to be in Australia, have been your (or your spouse’s) main place of residence for at least 10 years, and can't be a caravan, mobile home, or houseboat.

Amounts contributed under this new measure will be counted under the Age pension asset test and subject to deeming under the income test.

For more information

Aside from financial implications, there may be practical and emotional implications relating to selling your home or investment property.

It's worth considering all of the implications before you sell. Talk with a financial adviser and use our home and retirement planner to get an idea of how much you could end up with and how your property could fit into your retirement plans. If you don't have a financial adviser, you can find one using our online tool or call us on 131 267.

Important information

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It’s important to consider your particular circumstances and read the relevant Product Disclosure Statement or Terms and Conditions before deciding what’s right for you. This information hasn’t taken your circumstances into account.

This information is provided by AMP Life Limited. Read our Financial Services Guide for information about our services, including the fees and other benefits that AMP companies and their representatives may receive in relation to products and services provided to you. All information on this website is subject to change without notice.