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Why it might make sense to sell your investment property before you retire

As retirement is approaching, it’s natural to reassess your financial strategies, ensuring a comfortable and stress-free retirement. For many, investment properties have been a cornerstone of wealth accumulation, but as retirement looms, it’s prudent to review their role in your overall financial plan.

Owning an investment property can build wealth, providing both rental income and potential capital appreciation. However, relying solely on property rental yields to fund your retirement may not be enough. Consider the risks; loss of tenants means loss of income, properties can’t be partially sold to cover expenses, selling can be a slow process and tax benefits from negative gearing diminish once you retire.

As you transition into retirement, your tax situation changes. Therefore, it’s essential to evaluate your investment property portfolio with consideration to tax efficiency and liquidity.

One strategy for soon-to-be retirees to consider is leveraging superannuation contributions. With superannuation contribution caps set to rise for the first time in three years, there’s a window of opportunity to optimise your retirement savings.

Concessional contributions to super offer significant tax advantages. These contributions, made before tax, include employer contributions, salary sacrifice contributions and personal deductible contributions. The concessional contributions cap is set to increase to $30,000 from 1 July 2024. In addition, with the ability to carry forward unused amounts for up to five years, it presents an opportunity to claim a larger tax deduction to offset a portion of any capital gain from the sale of the property. This option may not be available after retirement as a work test applies to tax deductible contributions past age 67. Note, individuals with a total super balance exceeding $500,000 on June 30 of the previous financial year may not qualify.

In addition, non-concessional contributions to super provide flexibility for after-tax contributions. With the annual non-concessional limit set to rise to $120,000 from 1 July 2024, and the bring-forward provision allowing contributions of up to $360,000 in a single year for those under 75, there’s further room to increase retirement savings in the lead up to retirement.

Yet, navigating the complexity of super contributions requires careful consideration of your individual financial circumstances so it’s imperative to receive good financial advice. Whether aiming to minimise tax liabilities, enhance retirement income, or optimise wealth transfer, aligning your investment property strategy with superannuation contributions can yield significant long-term benefits.

Reviewing your investment property portfolio before retirement isn’t merely about crunching numbers; it’s about crafting a comprehensive strategy to safeguard your financial future. By leveraging the upcoming changes in superannuation contribution caps and exploring lesser-known strategies like carry-forward contributions, you can position yourself for a more secure and prosperous retirement.

As the adage goes, “An ounce of prevention is worth a pound of cure.” Taking the time now to reassess your investment property portfolio and align it with your retirement goals could save you not only serious tax dollars but also potential headaches down the road. After all, retirement should be about relaxation and enjoyment, not financial worries.


This is intended to be general advice only. Goldsborough Financial Services has not taken into account the objectives, financial circumstances or investment needs of any particular person.  For specific advice on your situation please contact your Goldsborough Financial Planner.

B.Comm ADFS (FP) | Authorised Representative No. 325471

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