Many Canberran’s that are either retired or getting close to retirement have a large percentage of their net worth tied up in their family home.
While the family home is exempt from the capital gains tax, it is a nonincome producing asset and will require a substantial amount of money to maintain each year to protect the capital value.
Since 2015 houses in Canberra have enjoyed significant increase in value while units and townhouse have not enjoyed the same level of increases so currently apartments and townhouses offer great value.
The other emerging issue is rates which have raised over 40% in the last three years so the cost of keeping the family home may be unsustainable.
Perhaps look at downsizing into an apartment or townhouse, this will not only give you more free time but also more money to help fund your retirement. Planning for retirement includes where you want to live and the lifestyle to which you are looking forward to.
The first step is a chat with your financial planner or accountant to determine your true financial position, sometimes this can be a very sobering conversation.
The second step is obtaining a realistic market appraisal for the value of your current home. This is a good base for your financial planner or accountant.
The third step is checking out alternative accommodation that works for you now and in 10 -15 years’ time. Choosing this right property on your first downsize can often result in only moving once, ideally look for a single level or an apartment block with lift access close to shops and transport so you can still maintain independence even without a car. Remember lifestyle is also very important in your planning.
Once you know what your home is worth and what a suitable replacement will cost, you then have a clear idea of what additional funds you have available to either invest or enjoy.
We recently helped a lady who was looking at retirement and realised, after a conversation with her financial planner, that she did not have enough super to fund her current life style. She downsized from a large family home to a spacious townhouse both in the inner north and was able to invest around $500,000, buy a new car and take an lengthy holiday.
Often this planning process may take several years. At Maloneys we are happy to provide you with a pressure free market appraisal which will help you start your planning for the future.