Should I sell my $1m investment property and put it into my super?

I’m a young retiree at 61 years. I have a $500,000 share portfolio and a 20-year-held investment property worth $1 million. I’m of a mind to sell the property and realise the share portfolio over the next four years, and slowly use concessional contributions to the maximum to get the money into a good super fund.

I wonder if I’m putting all my eggs into one basket, so to speak. However, I feel simplicity moving forward in retirement is good. The amount in super should provide a perpetual retirement income, as we intend to take the minimum government limits, i.e. 4 per cent, 5 per cent, etc. What are your thoughts on such a simplification?

Finally, you mentioned the downsizer contribution of $300,000 into super. If you’re already at your cap, i.e. $1.9 million for myself, I take it the $300,000 has to sit in the accumulation bucket and thus have gains taxed. Is this correct?

You’ve held the investment property for a long time, so the decision about selling it sooner rather than later should be based primarily on its future potential, not on how long you have owned it.

But I do think money invested in a good super fund should outperform a 20-year-old investment property, particularly once you consider the costs and hassles that come with owning property.

I also don’t see why you need to leave all the proceeds in accumulation mode. It would seem you have plenty of room to contribute money to super and then transfer it to pension mode, where the earnings will be tax-free.

As for investing part of the portfolio more aggressively in international shares, there is nothing wrong with that in principle. The important point is that super is merely the structure – you can still have a well-diversified portfolio inside it. Moving your investments into super does not mean putting all your eggs into one investment basket.

As far as the downsizer contribution is concerned, the limit is $300,000 per person, which means a couple may be able to put $600,000 into super, irrespective of age or the amount already in super.

There is no requirement that a downsizer contribution must stay in accumulation mode. The transfer balance cap is now $2.1 million, so provided you have sufficient personal transfer balance cap available, you may have plenty of space to move more of your super into pension mode.

You have mentioned several times that the “old” capital gains tax regime of a 50 per cent discount will apply for pensioners and others in receipt of government assistance rather than the new laws. Does this apply only to shares purchased before July 1, 2027 and will new shares or dividend reinvestments purchased after July 1, 2027 be subject to the new capital gains rules?

As I understand it, cost base indexation will apply to determine the amount of CGT for gains that accrue from July 1, 2027, however, anyone who receives at least $1 of government income support in the year the asset is sold won’t be subject to a minimum tax rate of 30 per cent.

Shares you own now and liquidated before June 30, 2027 will be subject to the existing CGT rules with the 50 per cent discount applying.