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Keep that investment property out of super - here's why · The Money Puzzle

0:10
Speaker 1: Hello and welcome to the Australian's Money Puzzle podcast. I'm
0:13
Speaker 1: James Kirby, was editor at The Australian. Welcome aboard, everybody.
0:18
Speaker 1: And thank you actually for having me on board and
0:21
Speaker 1: back on board. Great to talk to you again. You
0:23
Speaker 1: may have gathered I was off for a few weeks there.
0:27
Speaker 1: Last week's shows were a pre-record. I will now freely
0:32
Speaker 1: admit to you. I hope you enjoyed the last few
0:35
Speaker 1: weeks that James Gerrard and Stuart Weems And I have
0:40
Speaker 1: to say, I think they both did a sterling job
0:43
Speaker 1: on the show. And you will hear them, of course,
0:46
Speaker 1: we will have them both back as regular guests very soon.
0:49
Speaker 1: I've been trying to catch up with a month's worth
0:52
Speaker 1: of financial news and emails and everything else. I've also
0:57
Speaker 1: been trying to catch up, of course, with all the
0:58
Speaker 1: questions that have come in. And just looking at this
1:01
Speaker 1: particular batch that I was confronted with on my return.
1:08
Speaker 1: it struck me that quite a few of the questions needed,
1:13
Speaker 1: what they needed was an accountant, you know, and we
1:16
Speaker 1: haven't actually had an accountant on the show before. And
1:22
Speaker 1: I have the ideal person to solve that particular issue.
1:26
Speaker 1: Duncan Perkins of Tax Time Accountants is someone I talk
1:29
Speaker 1: to quite regularly, but I haven't had him on the
1:32
Speaker 1: show before and I'm delighted to have him on today.
1:33
Speaker 1: How are you, Duncan? Hello, everyone. I'm very good, thank you.
1:38
Speaker 1: Great to have you on board. You know, sometimes you
1:40
Speaker 1: come back from your holidays and you say, oh gosh,
1:43
Speaker 1: you know, there hasn't been much news. And sometimes you
1:45
Speaker 1: come back and you say, whoa, you know, I missed
1:48
Speaker 1: a few things. And one thing certainly that caught my
1:53
Speaker 1: eye in recent days is this very intriguing, for any
1:58
Speaker 1: of the listeners that aren't, will say with this, the
2:02
Speaker 1: hottest issue tax-wise is in the nation, beyond a doubt, really,
2:07
Speaker 1: is tax concessions granted to older people through super, whilst
2:11
Speaker 1: through the general population, with both negative gearing and capital
2:15
Speaker 1: gains tax concessions. It is a hot potato politically. Every
2:21
Speaker 1: politician that ever went near it didn't manage to do it.
2:24
Speaker 1: And I include Paul Keating, who, believe it or not, folks,
2:26
Speaker 1: in 1987, scrapped negative gearing and had to bring it
2:29
Speaker 1: back after a year because it was such a fiasco
2:32
Speaker 1: in many ways. More recently in New Zealand, the Ahern government,
2:37
Speaker 1: that's Jacinda Ahern, she tried to scrap their version of
2:41
Speaker 1: negative gearing and capital gains tax and reform. The new
2:44
Speaker 1: government has basically reversed those changes. And in the interim,
2:49
Speaker 1: it's not the only reason, but one of the things
2:51
Speaker 1: that happened in the course of that attempt to change
2:54
Speaker 1: their tax deductions on property is that New Zealand is
2:59
Speaker 1: now The worst, by that I mean the worst affordability
3:02
Speaker 1: rental market in the world. Hard to believe, but if
3:04
Speaker 1: you live in Sydney or Melbourne, you will know that
3:07
Speaker 1: there are an enormous amount of young New Zealanders here.
3:10
Speaker 1: And they are here because they think our rents are cheap.
3:14
Speaker 1: So we have a real issue there about negative gearing
3:17
Speaker 1: and capital gains tax. Now, what's happened is that Treasury
3:22
Speaker 1: is reviewing both those issues. The Prime Minister, Anthony Albanese,
3:27
Speaker 1: has distanced himself and said, you know, that he didn't
3:29
Speaker 1: even know that this was going on. Whatever. Treasury will
3:33
Speaker 1: ultimately report on this. And if they suggest changes, the
3:37
Speaker 1: government will have to take them seriously. Big deal. Duncan,
3:41
Speaker 1: I imagine you spend a lot of your time... Every day.
3:44
Speaker 1: Every day. Between Catholicly gains and negative gearing, they're the
3:48
Speaker 1: two big tax deductions available to every person in Australia.
3:54
Speaker 1: Do you think they'll actually do anything?
3:57
Speaker 2: Oh, they'll constantly do things in the negative gearing space
4:00
Speaker 2: and the capital gains tech space. They have to. New
4:03
Speaker 2: Zealand's had a good go at it and good on them.
4:05
Speaker 2: I mean, they moved their interest rates before us up
4:09
Speaker 2: and it's hurting them now. But look, every day I
4:13
Speaker 2: would get a question of, David, I bought this property
4:16
Speaker 2: at such and such a time. I'm going to be
4:18
Speaker 2: selling it, I think. How much capital gains tax will
4:20
Speaker 2: I pay? And a lot of the time, people are
4:23
Speaker 2: well surprised about it. I think you would be foolish
4:27
Speaker 2: if there were any changes coming in this space and
4:31
Speaker 2: you had a couple of properties or even one investment
4:34
Speaker 2: property and the matter of sticking your head in the
4:38
Speaker 2: sand was your go-to.
4:41
Speaker 1: It would be a very foolish thing to do.
4:43
Speaker 2: You'd really need to speak to your accountant or financial
4:46
Speaker 2: planner or someone that's actually dealt in the capital gains
4:50
Speaker 2: tech space.
4:51
Speaker 1: But most people then listening to the show who have
4:54
Speaker 1: property or aspire to have property, when they do their numbers, right,
4:57
Speaker 1: they build in an assumption that the two great sort
5:03
Speaker 1: of tax deductions in the area that have been around
5:07
Speaker 1: for generations now will stay. They assume, one, that any losses,
5:14
Speaker 1: and that includes taxes, interest costs on their investment property
5:18
Speaker 1: can be set against their income tax. Big thing. There's
5:21
Speaker 1: nothing else substantially you can set against your income tax
5:24
Speaker 1: as an everyday Australian investor. And they also assume the
5:27
Speaker 1: day they sell the property, assuming they hold it for
5:29
Speaker 1: more than a year, that they will have a 50%
5:33
Speaker 1: discount on CGT, which basically works out at your marginal rate.
5:36
Speaker 1: CGT basically works out at your marginal rate of taxes.
5:39
Speaker 1: So are you saying then that people should wake up
5:42
Speaker 1: and smell the coffee here and say, there could be
5:44
Speaker 1: changes to these two tanks.
5:47
Speaker 2: Even if there isn't, they should constantly review their return
5:49
Speaker 2: on investment, return on asset, what their yield is on
5:52
Speaker 2: their investment. They should look at their opportunity cost as well.
5:56
Speaker 2: So there's so many people out there that are thinking
5:59
Speaker 2: they're making a fortune and doing really good things in
6:01
Speaker 2: the investment property market. When they get closer to retirement,
6:05
Speaker 2: they could have or should have or should be thinking
6:07
Speaker 2: about moving those investment properties into something like superannuation. which
6:12
Speaker 2: has a lot less headaches and other things like that
6:14
Speaker 2: and beneficial tax implications. So yeah, you should always be
6:17
Speaker 2: reviewing what you're doing with property and is that the
6:21
Speaker 2: best investment for you? If it's giving you a 2%
6:25
Speaker 2: yield per annum net after your tax and other things
6:28
Speaker 2: like that, you sit there and go, well, why have
6:30
Speaker 2: I got this million dollar property with a $ 400, 000, $ 500, 000
6:31
Speaker 2: debt on it? I could have $ 600, 000 in the bank.
6:36
Speaker 2: doing nothing, dealing with no tenants, no property managers, no repairs,
6:40
Speaker 2: no maintenance, no rates, and I'm getting 4%, 5% on it.
6:44
Speaker 2: Why wouldn't I do that?
6:46
Speaker 1: So when you say the opportunity cost, do you mean
6:49
Speaker 1: the opportunity cost that it could be in something like
6:52
Speaker 1: the share market, or do you mean it should be
6:55
Speaker 1: in a different structure like super?
6:57
Speaker 2: It could be in any of those, and you have
6:59
Speaker 2: to look at your opportunity cost in that regard. Also
7:02
Speaker 2: diversification is that so many people that you talk to
7:05
Speaker 2: that they have, say, I don't know, a million dollar
7:08
Speaker 2: property and that's their principal place of residence. And they
7:10
Speaker 2: might have a $ 500, 000 home loan against that, which is
7:13
Speaker 2: non-tax deductible. But they've also got an investment property for,
7:17
Speaker 2: let's say, a million dollars and it might have an
7:19
Speaker 2: $ 800, 000 debt on it. If you're working very long hours
7:24
Speaker 2: and et cetera to pay off the $ 500, 000 home loan,
7:28
Speaker 2: which is non-tax deductible, which has gone up from 2.5%
7:30
Speaker 2: to 6.5%. So your cost of paying off that non-tax
7:36
Speaker 2: deductible debt is, it's not good. Okay.
7:40
Speaker 1: So let's say, so this is really good for listeners,
7:43
Speaker 1: particularly listeners who are say mid-career. So let's say the
7:47
Speaker 1: listener has a home and they have a mortgage. I'm
7:53
Speaker 1: just going to throw numbers out here. Okay. And they
7:55
Speaker 1: have the home mortgage is 500 grand. They also have
8:00
Speaker 1: an investment property, it seems to be doing okay. The
8:04
Speaker 1: yield is hopeless. It's 2%, but they expected that. And
8:07
Speaker 1: they also have a mortgage on that. And that's about
8:10
Speaker 1: the same as their home mortgage. And they're, you know,
8:14
Speaker 1: they're 48. Are you saying to them, that property, you've
8:19
Speaker 1: got to shift it into super, what do you say,
8:21
Speaker 1: sooner rather than later? And why would you say that
8:24
Speaker 1: to them?
8:24
Speaker 2: Okay. So the investment property has done really well for you.
8:27
Speaker 2: If it's grown in value, so you might have bought
8:29
Speaker 2: it for I don't know, $ 600, 000 and now it's worth
8:32
Speaker 2: a million dollars. So you pay $ 400, 000 on that. And
8:35
Speaker 2: you might have a superannuation worth $ 100, 000 and you're 48.
8:42
Speaker 2: Get it across to super. It would be a smarter move.
8:45
Speaker 2: Then you've got some diversification going on. This is just
8:48
Speaker 2: general advice, but look at your opportunity cost. I'm dealing
8:52
Speaker 2: with landlords. I'm dealing with, not landlords, I'm dealing with
8:55
Speaker 2: property managers. I'm dealing with tenants on repairs and all
8:58
Speaker 2: this other stuff. I've got to do my tax return
8:59
Speaker 2: every year. I've got to go and see Duncan. I've
9:01
Speaker 2: got to do these tax returns. If we just shoved
9:05
Speaker 2: it into super, how hard would that be? And then
9:07
Speaker 2: every year, now that I don't have an investment property yet,
9:10
Speaker 2: all I have is my non-tax deductible home loan debt.
9:13
Speaker 2: I don't have to sit down and juggle the numbers around. Yes. Okay.
9:16
Speaker 2: Very good.
9:17
Speaker 1: What's the downside here? The money's in super forever, right?
9:20
Speaker 1: So that's the only thing, isn't it? You have only
9:24
Speaker 1: one thing you can do with the money from that
9:25
Speaker 1: investment property then, once you've transferred it into super, which
9:29
Speaker 1: is financed through super. You can't do anything else.
9:31
Speaker 2: The thing is that if the money's sitting in superannuation,
9:34
Speaker 2: in an industry fund or retail fund or sitting in
9:36
Speaker 2: a self-managed super fund, who cares?
9:38
Speaker 1: Oh, look, what does a person do.
9:40
Speaker 2: In regards to an investment property when they first buy it?
9:43
Speaker 2: They don't sell it and then go and spend it
9:45
Speaker 2: on a holiday or a trip around the world. They
9:48
Speaker 2: reinvest it back into other investments. usually at a far
9:51
Speaker 2: lower yield than superannuation anyhow. Superannuation did 11% last year
9:57
Speaker 2: in most industry funds. Property, yes, may have done that,
10:01
Speaker 2: but then the taxation rates and other things like that.
10:05
Speaker 2: One of the things that I learned at university is skills, knowledge,
10:08
Speaker 2: and attitude. And skills is one plus one equals two,
10:12
Speaker 2: and then you build your knowledge from the skills that
10:14
Speaker 2: you've acquired. But the problem is, from a financial planning
10:18
Speaker 2: or an accounting perspective, is that as soon as we
10:20
Speaker 2: talk to someone and we build their knowledge around that,
10:24
Speaker 2: and this is with the listeners as well, as they
10:26
Speaker 2: start building their knowledge around alternative investments like superannuation or
10:31
Speaker 2: EGS or whatever the case may be, it doesn't matter
10:35
Speaker 2: because their attitude may be property. So therefore, it doesn't
10:39
Speaker 2: matter what you do. It all sounds great, but I
10:41
Speaker 2: like property because my dad did well in property or
10:44
Speaker 2: my next door neighbor did well in property. So I'm
10:46
Speaker 2: going to do well in property.
10:47
Speaker 1: Yeah, and there's a sense that it's easy. There's a
10:50
Speaker 1: sense that, as you say, there's a sense it's easier,
10:52
Speaker 1: but it's not. It's a hell of a lot more
10:53
Speaker 1: work than any other asset class. I certainly would agree
10:57
Speaker 1: with you there. But here's the thing about the sensible
11:00
Speaker 1: option for many people of holding an investment property, if
11:05
Speaker 1: you ever have one or more than one or aspire
11:08
Speaker 1: to have one, to have it in super... So, which
11:12
Speaker 1: is better than Duncan? Is it better to have the
11:15
Speaker 1: investment property for a few years and transfer it into
11:18
Speaker 1: your super fund? Or is it better to start at
11:21
Speaker 1: the very start and say, I know I'm only 30
11:25
Speaker 1: or 40, but I'm going to start with the investment
11:30
Speaker 1: property in super. Always, it's going to be inside super
11:33
Speaker 1: from the beginning. And I have to have an SMSF
11:36
Speaker 1: to do that, of course.
11:38
Speaker 2: That's another crazy idea because if you purchased a property
11:41
Speaker 2: in superannuation, you're most likely going to need to borrow
11:45
Speaker 2: for that. And The superannuation is a trust-type structure, so
11:50
Speaker 2: therefore you're talking negative gearing in a superannuation fund, which
11:54
Speaker 2: only has a tax rate of 15% and a capital
11:57
Speaker 2: gains tax rate of 10%.
11:59
Speaker 1: Why would you do it in that investment?
12:00
Speaker 2: Especially if you're earning $ 100, 000 or $ 200, 000 a year in salary,
12:04
Speaker 2: you would use the negative gearing and the capital gains
12:06
Speaker 2: tax advantages through your own personal note. So instead of
12:09
Speaker 2: holding the asset in a super, yes. The only time
12:14
Speaker 2: that you would buy a super is with cash.
12:16
Speaker 1: Okay, so you're saying... The optimum way to do it
12:21
Speaker 1: is to build up the investment property capital, access the
12:26
Speaker 1: negative gearing because you're paying loads of tax in your
12:29
Speaker 1: mid-career years, and then switch it into super. We won't
12:32
Speaker 1: spend much longer on this, but just tell the listeners,
12:35
Speaker 1: just tell the listeners, if you could, in succinctly about
12:39
Speaker 1: what you would have to do. Basically, you have to
12:42
Speaker 1: sell it to your own super fund at market cost.
12:45
Speaker 1: Isn't that right? How does it work?
12:47
Speaker 2: You can't sell residential property to your own superannuation fund.
12:50
Speaker 2: So I would forget that. Look, you've already got a property.
12:52
Speaker 2: You might have a property worth a million dollars in
12:54
Speaker 2: your own home. So diversification is the key. So once
12:58
Speaker 2: you've paid off your home loan, which is a non-tax
13:00
Speaker 2: deductible debt, to pay off $ 100, 000 non-tax deductible debt, you
13:03
Speaker 2: can basically earn $ 200, 000 paid tax on that to pay
13:06
Speaker 2: off the $ 100, 000. It's a hard yard. And there's so
13:10
Speaker 2: many people out there getting to retirement and they're, say,
13:13
Speaker 2: selling their investment property, paying capital gains, etc., They've still
13:17
Speaker 2: got debt.
13:17
Speaker 1: On their own home.
13:18
Speaker 2: They don't move that money into their super. They actually
13:20
Speaker 2: pay off their own home loan. And then they sit
13:22
Speaker 2: there with a property that they have worth a million dollars.
13:26
Speaker 1: No debt.
13:27
Speaker 2: Full pension. And no super. Middle to no super. And
13:31
Speaker 2: it's a horrible way to look at things. It's horrible
13:34
Speaker 2: because the income is so poor. Just to explain to
13:36
Speaker 2: the listeners once more about the nature of the property.
13:39
Speaker 2: If I own a shop, I can transfer it into
13:41
Speaker 2: my super fund. Commercial property, yes. Okay.
13:44
Speaker 1: If I own a house down the street... It's an
13:46
Speaker 1: investment property. I'd like to have it in my super fund. No.
13:51
Speaker 1: When you say no, do you mean it doesn't make
13:53
Speaker 1: sense or it's legally impossible?
13:54
Speaker 2: You can't do it. No, you can't do it.
13:56
Speaker 1: Okay, just explain to people why you can't do it.
13:59
Speaker 2: Well, it just comes down to the taxation. So what
14:01
Speaker 2: you're doing is almost tax avoidance. So you've got a
14:07
Speaker 2: property that is a residential property and you're moving it
14:10
Speaker 2: across to a superannuation fund. then it turns into pension phase.
14:14
Speaker 2: There's no taxes on that income when it's in pension phase.
14:17
Speaker 2: But even if it's in superannuation, accumulation phase, it's still
14:20
Speaker 2: only taxed at $ 0. 15 to the dollar, and the capital
14:22
Speaker 2: gains tax is only $ 0. 10 to the dollar.
14:25
Speaker 1: Yeah, yeah, yeah. So the point you're making is that tax-wise,
14:33
Speaker 1: it's so much better outside because of negative gearing. That's right, yes, yes. Okay,
14:38
Speaker 1: and I suppose just to finish off on this, negative gearing.
14:43
Speaker 1: As rates are relatively high at the moment, negative gearing
14:46
Speaker 1: is relatively better, I assume, because the costs are higher.
14:50
Speaker 1: But again, it comes down to your net yield. Yes, yes, yes.
14:54
Speaker 1: And net yields, they must be improving a bit with
14:57
Speaker 1: rents going up so much.
14:59
Speaker 2: Yeah, but there's always a peak to that. Look, I
15:01
Speaker 2: think property will always give you a gross 5%. So
15:05
Speaker 2: in other words, if you've got a $ 100, 000 property and
15:07
Speaker 2: it's giving you $ 10, 000 a year rent, You say, well,
15:09
Speaker 2: let's give me your 10% yield. You're speaking rubbish, Duncan.
15:12
Speaker 2: I say, no, your property is actually probably worth closer
15:15
Speaker 2: to $ 500, 000. So therefore, your yield comes back to more
15:20
Speaker 2: like 5%. So if you've got costs and other things
15:26
Speaker 2: on top of that and repairs, it's just hard. It's
15:31
Speaker 2: a hard thing when you've got a massive home loan.
15:33
Speaker 2: So what the easiest thing to do is buy a property,
15:37
Speaker 2: live in it, do it up, When it's too big
15:39
Speaker 2: or too small for you, sell it, take your tax-free wing,
15:43
Speaker 2: roll it into the next venture. There's a lot of
15:45
Speaker 2: people that have made a lot of money just in
15:47
Speaker 2: their principal place of residence. You get bigger discounts and
15:50
Speaker 2: everything like that. And then build your wealth over there
15:52
Speaker 2: in your superannuation or build it in your ETFs or
15:56
Speaker 2: other little side hustles. And you've got nice diversification.
15:59
Speaker 1: Very good. Very good. We haven't had you on the
16:02
Speaker 1: show before, but we can hear clearly you're a hard
16:05
Speaker 1: numbers man. I should have accountants on the show more often. OK, folks,
16:09
Speaker 1: we'll take a short break. We'll be back with Duncan
16:11
Speaker 1: in a moment. Hello and welcome back to the Australian's
16:18
Speaker 1: Money Puzzle podcast. I'm James Kirby and I'm talking to
16:21
Speaker 1: Duncan Perkin of the Tax Time Accountants group. Now, Duncan
16:28
Speaker 1: wants to tell you a little bit about home equity
16:32
Speaker 1: and the home equity access themes. Just to introduce this to, again,
16:36
Speaker 1: to listeners, I'm sure most of them are familiar with it,
16:39
Speaker 1: but there is a growing appetite and a growing supply
16:42
Speaker 1: of products whereby you can access the equity in your
16:47
Speaker 1: home to do other things. Mostly this is older people.
16:51
Speaker 1: So for instance, let's say someone is whatever, 77, and
16:55
Speaker 1: they have, you know, a small pension income, but they're
16:59
Speaker 1: sitting on a house and it's worth, you know, a
17:01
Speaker 1: million dollars or $ 2 million. This is completely common in
17:05
Speaker 1: our bigger cities now. So there are products. One of
17:09
Speaker 1: them is a government product that allows you to do
17:12
Speaker 1: an arrangement, basically, where you get some cash as income,
17:16
Speaker 1: and then you pay the price for that cash at
17:18
Speaker 1: the far end when you sell your home. This is
17:20
Speaker 1: home equity. They don't have to be older, and I've
17:25
Speaker 1: heard some stories which make me shudder, Duncan, about quite
17:30
Speaker 1: young people who, in one case, I've heard stories of
17:34
Speaker 1: people who inherited homes and two seconds later were tapping
17:38
Speaker 1: the home equity to do who knows what, you know,
17:40
Speaker 1: just have fun. Tell us about that and what opportunities
17:44
Speaker 1: might be out there for the listeners.
17:46
Speaker 2: Yeah, okay. So I'll talk about the Home Equity Actors
17:48
Speaker 2: Scheme first. And your example there, a million dollars with
17:51
Speaker 2: no debt, little old dear, 77 years of age, maybe
17:54
Speaker 2: husband passed away 10 years earlier. Your listeners are are
17:59
Speaker 2: probably a younger listener. And so this applies to your parents, maybe.
18:03
Speaker 1: I don't know.
18:03
Speaker 2: But anyway, so mom's sitting in there. The gutters are
18:07
Speaker 2: falling down. The house needs repair. She's been in there
18:10
Speaker 2: since the 70s. She raised her kids there and she
18:13
Speaker 2: loves the home, but she's got no money in the bank.
18:16
Speaker 2: She gets the full pension, which is about $ 23, 000 a year.
18:19
Speaker 2: She could get access to the home equity access scheme,
18:21
Speaker 2: which is 20% of the value of the asset.
18:24
Speaker 1: And she can get 150% of.
18:27
Speaker 2: The value of the pension. So in other words, that
18:29
Speaker 2: would give her roughly about $ 10, 000 extra a year in
18:33
Speaker 2: cash flow, which would help her with living, just that
18:38
Speaker 2: day-to-day living. So It's a great product and it's only
18:41
Speaker 2: at 3.95%. This is a government product. Yeah, it's a cracker.
18:46
Speaker 1: It's a cracker because it's 3.95% because it's way cheaper.
18:50
Speaker 1: The rate is way lower than commercial products. Is that
18:52
Speaker 1: what you're saying?
18:53
Speaker 2: Yeah, and it capitalizes on itself. So there's no repayments
18:56
Speaker 2: per month either. So it just capitalizes. So in the
18:59
Speaker 2: first year, she would have a $ 10, 000 loan, roughly a
19:02
Speaker 2: little bit more than that because of the 3.95% interest
19:05
Speaker 2: capitalizing on itself. But then a year after that, it's
19:07
Speaker 2: 20 odd thousand dollars in the year after that it's
19:09
Speaker 2: about 30,000. Well, she's got a, she's got a $ 200, 000
19:12
Speaker 2: limit there, Joe. So she's never going to use all
19:16
Speaker 2: of that money up, but it just gives her some
19:19
Speaker 2: quality of life.
19:20
Speaker 1: Gets her to go down and see her grandkids on
19:22
Speaker 1: the other side of that. It's really, it's really good.
19:23
Speaker 1: You get, you stay in the house and suddenly your
19:27
Speaker 1: income goes from 23,000 to whatever, 33,000. Way better.
19:29
Speaker 2: Well. Children have concerns over that because they feel that
19:36
Speaker 2: mum's home is being eaten away from the reverse mortgage
19:40
Speaker 2: aspect of it. But again, as I said, it's only 3.95%.
19:43
Speaker 2: And the value of that home is probably increasing per
19:46
Speaker 2: annum by 5% or 6%. So you're probably fine. I
19:51
Speaker 2: believe that if it was my mother in that position,
19:54
Speaker 2: I would be more than happy for her to load
19:56
Speaker 2: up on a facility like that. But also in regards
19:59
Speaker 2: to that same facility, what if you've got a couple
20:01
Speaker 2: that have got $ 2 million in a $ 2 million home
20:05
Speaker 2: and no debt, and they've got $ 1 million in their bank,
20:08
Speaker 2: they're self-funded retirees. And that investment's earning them 7% or 8%
20:13
Speaker 2: or 9% in income. They have to keep drawing down
20:17
Speaker 2: on that investment, don't they? But they're entitled to the
20:20
Speaker 2: home equity access scheme as well, which is 150% of
20:24
Speaker 2: their joint income. So that'll give them about $ 65, 000 a
20:27
Speaker 2: year income at 3.95%. It's not means tested? No, no, no, no.
20:30
Speaker 1: It's 67. What you're saying is once you are 67
20:32
Speaker 1: years of age, That's the only entry criteria.
20:39
Speaker 2: That's right. It's 150% of your age pension, less your
20:43
Speaker 2: existing age pension. So that couple are not getting an
20:46
Speaker 2: age pension because they've.
20:48
Speaker 1: Got money in the bank. So they can get 65,000
20:50
Speaker 1: a year. That's really terrific. You know, I had Dr.
20:53
Speaker 1: Sam Wiley on the show and he called that. It's
20:55
Speaker 1: the best kept secret in Australian finance, he says.
20:58
Speaker 2: I love it. So compare that to reverse mortgages or
21:02
Speaker 2: equity release mortgages.
21:04
Speaker 1: Where you were giving the example where the young couple.
21:06
Speaker 2: Had just ripped everything out and bought a Porsche and
21:08
Speaker 2: a holiday overseas and other things like that.
21:10
Speaker 1: And then all of a sudden they go, oh, we've
21:11
Speaker 1: got a lot of debt here. $ 300, 000 is really hard
21:14
Speaker 1: for us to pay off.
21:15
Speaker 2: We don't know what we're doing here. We inherited this
21:16
Speaker 2: $ 1. 5 million home from mum. And now we've got to
21:22
Speaker 2: earn all of this money to pay off this. Yeah,
21:24
Speaker 2: not going to happen. Yeah, maybe sell your home. Take
21:26
Speaker 2: the wing. You'll probably make another $ 300, 000 on the sale
21:28
Speaker 2: of the $ 1. 5 million home that you inherited.
21:32
Speaker 1: But get rid of that debt real fast, because otherwise
21:34
Speaker 1: that debt.
21:35
Speaker 2: Is going to accumulate. And you'd be talking as close
21:39
Speaker 2: to 10% on those types of loans.
21:41
Speaker 1: It sounds like you're deeply intolerant to non-tax deductible debts.
21:45
Speaker 1: Would that be a fair thing to say?
21:47
Speaker 2: Well, absolutely, because you've got to earn nearly twice the
21:50
Speaker 2: amount to pay back the debt. So if you borrowed
21:53
Speaker 2: $ 10, 000 from me, you've got to go and earn $ 20, 000,
21:56
Speaker 2: depending on your tax rate, pay the tax on that.
22:00
Speaker 2: just to pay me back the $ 10, 000. But again, then
22:04
Speaker 2: if there's interest on that, you're going to pay the
22:06
Speaker 2: interest at the same time as well. So yeah, I'm
22:09
Speaker 2: deadly against it. So yeah.
22:10
Speaker 1: Yeah, you're deadly against it. And I can see why. Okay,
22:13
Speaker 1: very interesting. Just to cover back on that, folks. So
22:16
Speaker 1: this is the whole, it used to be called the
22:18
Speaker 1: pension loan scheme. It was upgraded and improved by the
22:23
Speaker 1: previous government, actually, Jane Hume, I'm pretty certain did all this.
22:27
Speaker 1: And it opened it up. It used to have all
22:30
Speaker 1: sorts of limits, right? But now it doesn't. You just
22:32
Speaker 1: have to be 67 or over. It's government funded. It's
22:37
Speaker 1: government run. It has some limitations compared to the commercial ones,
22:42
Speaker 1: but not many. And it has a rate, which is,
22:46
Speaker 1: I'm not kidding. Duncan, it's coming up on half the
22:50
Speaker 1: commercial rates. Yeah. So check it out.
22:54
Speaker 2: And it capitalizes on itself as well.
22:56
Speaker 1: Yeah. If you have a parent in that situation, or
23:00
Speaker 1: if you are in that situation, just have a look
23:03
Speaker 1: at it. It's sitting there on the web. It's quite
23:05
Speaker 1: well explained. They're not as slick. They're not as fast
23:11
Speaker 1: as private operators, but hey, if they're giving it to
23:14
Speaker 1: you for half the price, I imagine that's well worth.
23:17
Speaker 2: Just one really quick note on that too. If you're
23:20
Speaker 2: already 77 years of age and you already have a
23:23
Speaker 2: $ 100, 000 loan against that property... As a child, you may
23:27
Speaker 2: want to pay that out for your parents. And they're
23:30
Speaker 2: only paying interest 3.95%, but you're paying 6.5% against your mortgage.
23:36
Speaker 2: The income that they're receiving from that will actually well
23:39
Speaker 2: and truly cover it until they do get the home
23:41
Speaker 2: equity access thing. So if there's a way that you feel, oh,
23:46
Speaker 2: we're not going to get it because of X, Y, Z,
23:48
Speaker 2: look at it differently. Look at it outside the box.
23:52
Speaker 1: Look at it creatively. Very good. OK. Thank you, Duncan.
23:56
Speaker 1: All right. Hey, we'll take a short break and we
23:58
Speaker 1: will come back and deal with some of the questions
24:01
Speaker 1: that have been accumulating. OK, back in a second, folks. Hello,
24:13
Speaker 1: welcome back to the Australian's Money Puzzle podcast. James Kirby
24:16
Speaker 1: talking to Duncan Perkins of Tax Time Accountants. A debut
24:21
Speaker 1: guest on the show, Duncan. You okay with the questions?
24:24
Speaker 1: Have you had a look at them all? Are you
24:26
Speaker 1: able to have a go at them? We're trying to
24:28
Speaker 1: get through them all. Howard, my friend's parents bought an
24:32
Speaker 1: investment property for $ 100, 000 in the 1990s. Oh, those were
24:36
Speaker 1: the days. Let's say it's worth a million today. They
24:39
Speaker 1: move into it and live out their days in this property.
24:42
Speaker 1: When they die and the property passes down to my friend,
24:45
Speaker 1: would it be exempt from CGT if it were sold?
24:48
Speaker 2: No.
24:50
Speaker 1: No. Okay. Alternatively, my friend could live in it as
24:53
Speaker 1: principal place of residence, which I assume would reset the
24:57
Speaker 1: cost base of the property. What are your thoughts? Okay,
25:02
Speaker 1: so I'll just break down a bit.
25:03
Speaker 2: So bought it for $ 100, 000 in the 90s, worth a
25:06
Speaker 2: million today, as of today, with no changes to negative
25:09
Speaker 2: veering or capital gains tax in the future. You've got
25:13
Speaker 2: to assume that. So let's just look at the situation today.
25:16
Speaker 1: $ 900, 000 gain, 50% discount.
25:17
Speaker 2: $ 450, 000, you're going to be probably paying around about $ 200, 000
25:24
Speaker 2: worth of tax there. So that's if the parents own
25:29
Speaker 2: it 50-50. So therefore, each person would be assessed.
25:33
Speaker 1: On roughly $ 100, 000 income each.
25:35
Speaker 2: Now, if they're retired and they've got no income, really,
25:39
Speaker 2: it'd probably be about maybe $ 20, 000 tax each.
25:42
Speaker 1: So my thoughts are is take your win, take your
25:46
Speaker 1: $ 900, 000 and In a year that you're not working. Anyway,
25:52
Speaker 1: I would not play around with.
25:54
Speaker 2: The future of what's going to happen in 10 years'
25:57
Speaker 2: time because it will hurt and it'll hurt big time.
26:01
Speaker 2: So we've actually had one very similar to this recently
26:04
Speaker 2: where the grandmother died and passed the asset down to
26:07
Speaker 2: the daughter. And anyway, it's a bit of a mess.
26:10
Speaker 2: But capital gains tax on that is around about $ 400, 000.
26:12
Speaker 2: And they're not happy about that. So what they should
26:15
Speaker 2: have done is sell the asset years ago. But anyway,
26:18
Speaker 2: hindsight's a wonderful thing. So when they die, property passes down.
26:22
Speaker 1: Would it be? No.
26:23
Speaker 2: Well, we said that. So even if the parents pass away,
26:27
Speaker 2: the capital gains tax is still calculated from the 90s to, say,
26:31
Speaker 2: today when they moved into it. And then there's a
26:34
Speaker 2: percentage rule that you use and it's convoluted and calculated.
26:39
Speaker 2: But the estate would pay the capital gains tax. And
26:43
Speaker 2: then the person receiving it, like the person, the son,
26:47
Speaker 2: the beneficiary, they would receive that with no tax. And
26:50
Speaker 2: if it was their principal place of residence, they could
26:53
Speaker 2: sell that within 12 months, six weeks, whatever. And then
26:57
Speaker 2: there'd be no tax on that for them either. All right.
27:00
Speaker 1: I hope that makes sense. And by the way, Howard
27:03
Speaker 1: and all the Howards out there, this is never advice.
27:06
Speaker 1: This is information only, as you all know. Okay, Graham says,
27:10
Speaker 1: this question was specially curated for you, Doug. Is it
27:15
Speaker 1: worth purchasing accounting software to help with bookkeeping prior to
27:19
Speaker 1: sending to an accountant your annual returns? Or is it
27:23
Speaker 1: reasonable to just use an Excel document? Or someone might say,
27:26
Speaker 1: is it reasonable to bring in an envelope full of
27:28
Speaker 1: receipts and spread them out on the tables?
27:31
Speaker 2: Yeah, those days are going, especially with single-touch payroll requirements
27:36
Speaker 2: and other things like that. There's so many, I mean, they're,
27:40
Speaker 2: If you're staff, you have to have single-touch payroll. What
27:42
Speaker 2: I would highly recommend there, the best one to have
27:45
Speaker 2: is the one that your bookkeeper or your accountant uses.
27:48
Speaker 2: So don't run off and buy an off-the-shelf, like, I
27:51
Speaker 2: don't know, Xero or Myob or whatever, and then you
27:53
Speaker 2: find out that your bookkeeper hates Myob or hates Xero
27:56
Speaker 2: or something like that. The best one to have is
27:58
Speaker 2: the one that the bookkeeper or the accountant uses, and
28:00
Speaker 2: they're all pretty good. Most of them are all cloud-based,
28:03
Speaker 2: so you can sit at home and look at your
28:05
Speaker 2: bookkeeping and your accounting, and your accountant can look at
28:08
Speaker 2: it at exactly the same time.
28:11
Speaker 1: Okay. And what about for people, say, doing an SMSF
28:13
Speaker 1: or something? Is there anything that you like?
28:15
Speaker 2: So our self-managed super fund, they're very specialized programs. BGL
28:18
Speaker 2: is one that we use. There's a couple of others
28:20
Speaker 2: out there. But for a self-managed super fund, you're probably
28:24
Speaker 2: better off linking up with your accountant and, again, using
28:28
Speaker 2: the program and the system that they use. Ours is,
28:30
Speaker 2: as I said, ours is BGL. So that would be
28:33
Speaker 2: the best one for us. Yeah.
28:34
Speaker 1: Okay. Now, thank you for that one. Andrew says, from
28:38
Speaker 1: the recent... podcast with Bruce Brammell, there were some details
28:42
Speaker 1: about the six-year rule, which I've always been fascinated with.
28:46
Speaker 1: I'd also like to poke Bruce as he consciously said
28:49
Speaker 1: six or 6.5 years, which I've also heard from others.
28:52
Speaker 1: Perhaps it's not even a six-year rule after all. The
28:56
Speaker 1: six-year rules, could you explain what it is and why
29:00
Speaker 1: our audience should know about it?
29:02
Speaker 2: So the six-year rule was originally brought in, I believe,
29:06
Speaker 2: back in the day when A lot of us worked
29:08
Speaker 2: in banks, police officers, teachers, nurses, and you were transferred
29:15
Speaker 2: to be promoted within the job. Those days have literally gone. Also,
29:21
Speaker 2: fringe benefits taxes wiped out a lot of the benefit
29:24
Speaker 2: from that. To give you an example, if a police
29:26
Speaker 2: officer was living in Brisbane and they were transferred to
29:29
Speaker 2: Cairns as the sergeant, there was usually a police officer's
29:34
Speaker 2: home provided for them. And so they were going, oh,
29:38
Speaker 2: I've just been transferred from Brisbane. I've just bought a
29:41
Speaker 2: house with my wife and two kids, and now I've
29:43
Speaker 2: got to go and work up in Cairns. So the
29:46
Speaker 2: government had a bit of relaxation around capital gains tax
29:49
Speaker 2: on that, and they said, okay, if you're forced to
29:52
Speaker 2: sell your home because of work, You got up to
29:56
Speaker 2: six years to sell that home. So that police officer
30:01
Speaker 2: could have bought that home a week before he found
30:04
Speaker 2: out about his transfer.
30:05
Speaker 1: There's no real timeline in regards to it. It's not
30:07
Speaker 1: a 12-month waiting period or anything like that. You have
30:10
Speaker 1: six years to enjoy the benefits of the tax, of
30:13
Speaker 1: the capital gains tax exemptions.
30:15
Speaker 2: Okay. That's right. So you can claim all of the expenses,
30:18
Speaker 2: the rates and mortgage, the rates, maintenance, insurance, interest, et cetera.
30:21
Speaker 2: You can claim all of that. And then if you
30:24
Speaker 2: move back into the property, it starts again. And that's
30:27
Speaker 2: what happened a lot of the time. You'd be promoted
30:29
Speaker 2: and moved up north or you'd be moved out west
30:31
Speaker 2: or something.
30:33
Speaker 1: So I think.
30:34
Speaker 2: That may actually be an area that government and ATO
30:39
Speaker 2: may focus on changing because So if a bank officer
30:44
Speaker 2: was transferred, they actually stayed in a bank officer home
30:48
Speaker 2: and they lived in that home and it was provided
30:50
Speaker 2: for by the bank and it was part of their package. Well,
30:52
Speaker 2: the ATO looked at that and they went, hang on
30:54
Speaker 2: a second, that's a fringe benefit. So therefore, we need
30:57
Speaker 2: to tax you on that. So the banks all said, well,
31:01
Speaker 2: we can't provide housing for staff anymore. So the, and again,
31:06
Speaker 2: the whole banking system and the transferring has changed quite
31:09
Speaker 2: a lot. But again, fringe benefits is not government. It's
31:12
Speaker 2: not a government tax. So therefore, state government. So police
31:16
Speaker 2: officers and nurses and that, they still have housing. But
31:19
Speaker 2: it's a very interesting space. There will be some major
31:22
Speaker 2: changes in there. But a lot of people now, what
31:24
Speaker 2: they're doing through what they call rent-vesting is that they
31:28
Speaker 2: buy a home, a unit or something like that, they
31:30
Speaker 2: rent it out, and then they call it their principal
31:32
Speaker 2: place of residence, and then they move back into mum
31:34
Speaker 2: and dad's place. And so that's called rent-vesting. So people
31:38
Speaker 2: are abusing.
31:39
Speaker 1: That rule. Some of them have been in place for
31:42
Speaker 1: six years or up to six years.
31:44
Speaker 2: Yeah, that's right.
31:44
Speaker 1: Yeah. I understand.
31:47
Speaker 2: So that rule is being abused. And once you start
31:50
Speaker 2: abusing it, the ICO and the government will actually start.
31:53
Speaker 1: So it sounds to me like you accountants are of
31:56
Speaker 1: the opinion it can't last forever. But do you know
31:58
Speaker 1: anything more than that? Is that just supposition or? No,
32:02
Speaker 1: that's just the Duncan theory of rules. It's just me. Definitely. Yeah.
32:07
Speaker 1: But watch this space. Yeah, watch this space. There's a
32:10
Speaker 1: lot of people doing it. Yeah, there's a lot of
32:12
Speaker 1: people doing it. Yeah, there's a lot of people doing it,
32:14
Speaker 1: and we've just told them all about it. Okay, very good. Now,
32:18
Speaker 1: there are three more questions, and they are all about ETFs.
32:22
Speaker 1: So I'm going to try and put them together, if
32:24
Speaker 1: I could. James, Josh, and Joel. So exchange-shared funds are terribly,
32:32
Speaker 1: increasingly popular. Everyone, I'm sure, on the show knows the basics.
32:36
Speaker 1: They know the basics. that you buy these funds, let's
32:40
Speaker 1: say you buy the Australian market or you buy the
32:43
Speaker 1: NASDAQ and you get whatever return that market did in
32:46
Speaker 1: the year, up or down. You can't do better than
32:49
Speaker 1: the market. You can't do worse. That's good enough for
32:51
Speaker 1: lots of people. And that's the traditional ETF. So the
32:55
Speaker 1: variety of questions around that, especially the main theme from
33:01
Speaker 1: these three questions is actually about children and kids. And
33:06
Speaker 1: I used to get this a fair bit too on
33:08
Speaker 1: radios when I did these radio shows where people would
33:11
Speaker 1: call in and they'd say, you know, I want to
33:14
Speaker 1: buy something for my kids. How do I start? Once
33:18
Speaker 1: upon a time, you'd say, oh, look, you know, buy
33:20
Speaker 1: one of the banks and one of the miners and
33:21
Speaker 1: start to build out from there. I mean, there was
33:23
Speaker 1: no ETFs or index funds. So now they're there. But
33:27
Speaker 1: the themes of these three questions is I want to
33:30
Speaker 1: do it for my kids. How did they do it?
33:33
Speaker 2: Well, that'll be in the parent's name. You could have
33:36
Speaker 2: a trust structure or something like that, but it can't
33:38
Speaker 2: be in the kid's names because they're minors. One of
33:41
Speaker 2: them is under one year of age, so it must
33:44
Speaker 2: be in your name. So therefore, you're going to be
33:46
Speaker 2: paying any tax on any income that rolls in from
33:49
Speaker 2: that investment. So if you're on $ 200, 000 a year, every
33:54
Speaker 2: dollar that comes in for young Joey, your two-year-old child,
33:57
Speaker 2: it's going to hurt you. So You should probably lean
34:01
Speaker 2: towards looking at your growth type investments. So CSL was
34:05
Speaker 2: one share that my mate told me to buy when
34:08
Speaker 2: my daughter was born back in 2002.
34:11
Speaker 1: What a good suggestion that was. Idiot, didn't buy it.
34:15
Speaker 1: He bought $ 10, 000 worth of BHP.
34:16
Speaker 2: Because- Because I watched the share price go from $ 28
34:22
Speaker 2: down to $ 12 because of a hepatitis C scare. So
34:26
Speaker 2: I said, oh, well, I'm smarter than you, mate. I'll
34:28
Speaker 2: buy BHB. And it was the stupidest thing I ever did.
34:31
Speaker 2: But yeah, so you want to look at your super
34:34
Speaker 2: high growth type ETS, my suggestion anyhow.
34:37
Speaker 1: Sorry, Duncan, you're suggesting that because they have low dividends
34:41
Speaker 1: and you don't want to be paying tax. That's right. Yeah,
34:43
Speaker 1: that's right.
34:44
Speaker 2: Really low income, only growth. So therefore they don't pay...
34:47
Speaker 2: They don't pay a lot.
34:48
Speaker 1: In dividends or invest with income.
34:51
Speaker 2: And then just put it in the bottom drawer and
34:54
Speaker 2: look at it once a year and let it grow.
34:57
Speaker 2: So I was actually only talking to a mate on
34:58
Speaker 2: the weekend and he did that. He did $ 100 a
35:01
Speaker 2: month for each one of his kids and they've just
35:04
Speaker 2: all been handed over $ 120, 000 each. And so he's just
35:09
Speaker 2: said it was simple. I just shoved it away. I
35:11
Speaker 2: didn't look at it. It was a growth fund. And
35:13
Speaker 2: then here you go, kids, here's $ 120, 000. So It's a
35:17
Speaker 2: great way to go and I really like the concept.
35:19
Speaker 2: If you want to add a little bit of spice
35:21
Speaker 2: to it, probably more so when you own personal ETF
35:26
Speaker 2: diversification portfolio, never buy ETFs with cash or try and
35:32
Speaker 2: always borrow to buy the ETFs because it's tax deductible.
35:36
Speaker 2: And so you would never buy an investment property with cash.
35:41
Speaker 1: You'd always buy.
35:41
Speaker 2: It with borrowings, wouldn't you? So why wouldn't you do
35:43
Speaker 2: the same with ETFs?
35:45
Speaker 1: Yeah. Well, why wouldn't you do the same with ETFs?
35:49
Speaker 1: Good question. Very good point. Why do you think that is?
35:53
Speaker 1: Why do you think people are so confident of borrowing
35:55
Speaker 1: to buy property and not confident to buy shares, especially ETFs,
36:00
Speaker 1: when we know that the track record of these... Well, GFC.
36:07
Speaker 2: Is... 2008, that put an end to all of that
36:09
Speaker 2: margin lending ideas. But I think margin lending is fine
36:13
Speaker 2: if you've got a a million dollar property and a
36:15
Speaker 2: $ 150, 000 home loan, you've got, you know, $ 850, 000 worth of
36:20
Speaker 2: equity in your home. If you take a small split
36:23
Speaker 2: facility and borrow against that facility and drop it into
36:26
Speaker 2: an ETF through dollar cost averaging, you won't go right.
36:31
Speaker 2: You're not going to have your house sold.
36:32
Speaker 1: Off on you and you're going to get your interest taxed.
36:36
Speaker 1: Just one last thing. Explain that again to the audience
36:38
Speaker 1: that it is a prosim thought that that they were
36:42
Speaker 1: going to help their kids. And they look at them,
36:44
Speaker 1: they're sitting out in the garden and they're eight and
36:46
Speaker 1: nine and they say, I really should do something. So
36:49
Speaker 1: we both agree, let's buy an ETF. But you're saying,
36:52
Speaker 1: just explain the notion of how they might take, what
36:55
Speaker 1: is the nature or the form of the loan or
36:57
Speaker 1: the gearing that they would do on it? Oh, well,
37:00
Speaker 1: I'll give you an example.
37:00
Speaker 2: So I have a million dollar home and you've got
37:03
Speaker 2: a $ 160, 000 mortgage against it, which is just the normal
37:06
Speaker 2: standard home loan. I would go to your broker or bank.
37:09
Speaker 2: I would top that up to say, I don't know, $ 300, 000.
37:12
Speaker 2: So now you've got a $ 150, 000 limit with zero debt
37:15
Speaker 2: on it. That's your investment facility. And then you've got
37:18
Speaker 2: a $ 150, 000 home loan with a limit of.
37:20
Speaker 1: 150 and zero debt.
37:22
Speaker 2: And it's called debt recycling. You can do a YouTube
37:24
Speaker 2: on it, people.
37:25
Speaker 1: And then you just, all you do is your dollar
37:27
Speaker 1: cost average out.
37:28
Speaker 2: Of the new facility, which has a zero balance of
37:31
Speaker 2: zero and a limit of 150. You pour, instead of
37:34
Speaker 2: taking money out of your savings to the detriment of
37:36
Speaker 2: your home loan, so your home loan is going to
37:38
Speaker 2: reduce very fast that your investment borrowings is going to increase.
37:42
Speaker 2: Before you hit $ 150, 000 worth of borrowings in investment borrowings,
37:46
Speaker 2: which is fully tax-deductible, your home loan will be smashed.
37:49
Speaker 2: It'll be wiped out. And so the only borrowings that
37:53
Speaker 2: you have within a couple of years, or I don't know,
37:55
Speaker 2: five years, the only borrowings that you have is tax-deductible borrowings.
37:59
Speaker 1: And not only that, but the borrowings that you post
38:02
Speaker 1: the ETFs on are on mortgage rates, which are lower
38:06
Speaker 1: than all other commercial rates.
38:07
Speaker 2: Yeah. And any interest that you're paying on it is
38:09
Speaker 2: tax deductible, but it's in an ETF that's probably giving,
38:14
Speaker 2: and a growth ETF, it's probably giving you 11% or 8%
38:17
Speaker 2: some years. You know what I mean?
38:20
Speaker 1: Very good.
38:21
Speaker 2: Yes.
38:21
Speaker 1: I like it. I like it. Terrific. Thank you very much, Duncan.
38:25
Speaker 1: Great to have you on the show today.
38:26
Speaker 2: Great to be on.
38:27
Speaker 1: And some really interesting issues we picked up there, folks.
38:31
Speaker 1: I'm sure you found that very interesting. Interesting about the
38:35
Speaker 1: property and SMSFs. or at least the outstanding advantage of
38:40
Speaker 1: property outside super because of negative gearing. Also about ETFs,
38:45
Speaker 1: it's funny we talk about ETFs all the time, but
38:47
Speaker 1: we haven't talked about financing them or gearing them. And
38:52
Speaker 1: why don't people do it since their track record would
38:56
Speaker 1: be comparable long-term with their average residential home returns across
39:03
Speaker 1: the country? Yes. The ATF can be sold to your
39:06
Speaker 1: self-managed seat. Yes, that's right. And they have no gutters
39:10
Speaker 1: and they have no maintenance. Okay, very good. Oh, just
39:16
Speaker 1: to let you know, we have Noel Whitaker, the legendary
39:21
Speaker 1: Noel Whitaker on the show on Thursday, everybody. So look
39:23
Speaker 1: out for that. Keep the emails running to themoneypuzzle at
39:27
Speaker 1: theaustralian.com.au and we'll talk to you. soon.