Retiree selling PPOR.. what happens now?

Hi all, i need help as i have no idea much about selling PPOR, income and finances.

My mum is a retiree and wants to sell her PPOR (downsizing reasons). IF she manage to sell her PPOR (then rents another property because she cannot find another one to buy just yet) and she puts the money into her term deposit account to generate an income. Would she have to get tax on this income?

Any thoughts would be good. Thankyou.
 
No she would definitely not get tax on that income.

She would however be liable to pay tax on that income.

However after 1 July 2012 there is no tax payable on the first $18k of income.

I am not sure if added to her pension it would put her in a position to need to pay tax.

Best to spend a couple of hundred dollars and talk to a financial adviser/planner or a local accountant.
 
No she would definitely not get tax on that income.

She would however be liable to pay tax on that income.

However after 1 July 2012 there is no tax payable on the first $18k of income.

I am not sure if added to her pension it would put her in a position to need to pay tax.

Best to spend a couple of hundred dollars and talk to a financial adviser/planner or a local accountant.

Actually an adult could earn up to $20,542 in taxable income and not pay tax because of the low income tax offset of $445.

And if you are lucky enough to be a senior, pension age I think, then you can earn up to $32,279 pa and not pay tax (singles or $28,274 each for couples).
 
And Pixie don't forget to consider Centrelink issues.

There is an income test and an assets test which affects pensions.

Selling the house and putting the money in the bank could reduce the pension - or it may actually increase it, depending on the circumstances I guess.
 
Hi all, i need help as i have no idea much about selling PPOR, income and finances.

My mum is a retiree and wants to sell her PPOR (downsizing reasons). IF she manage to sell her PPOR (then rents another property because she cannot find another one to buy just yet) and she puts the money into her term deposit account to generate an income. Would she have to get tax on this income?

Any thoughts would be good. Thankyou.
I think you will find Pixie, that if the money goes into a bank account the ATO will have an interest in the ACTUAL income earned but as someone said, it's unlikely to exceed the threshold.

CentreLink will have an interest in net asset value and will calculate DEEMED, or notional, income. Rental assistance will probably negate this. Personally, I believe in doing what makes most sense for the individual and letting the rest happen as a matter of course. Far less worry this way. :D
 
Why not take your mum to Centrelink for a planning session. Hubby took his mother a number of years ago when his father passed away and his mother was left with an income from shares but wanted to ensure she didn't lose her part-pension.

Hubby said he was pleasantly surprised at how well they looked after her, and he said they were very careful to ensure she didn't lose her part-pension. He said they seemed unbiased, and let's face it, if anybody should know the ins and outs of the pension, it is Centrelink.
 
Centrelink never crossed my mind, another place to sort help!
thanks so much guys...

I find it ironic, in fact I would call it hypocritical, that lots of people on those forum give crap to people on Centrelink/welfare yet think it's perfectly OK to plan your affairs just to get some ridiculous government pension.
 
I find it ironic, in fact I would call it hypocritical, that lots of people on those forum give crap to people on Centrelink/welfare yet think it's perfectly OK to plan your affairs just to get some ridiculous government pension.

Unbelievable!!!!!!!! Are you saying you can plan your tax affairs but someone's Mother is not entitled to plan her retirement?

Many a slip twixt cup and lip.
 
Unbelievable!!!!!!!! Are you saying you can plan your tax affairs but someone's Mother is not entitled to plan her retirement?

Many a slip twixt cup and lip.

Didn't say she can't plan it. I just find it perplexing that people assume age-related welfare is a divine right yet other welfare is for dole bludgers.
 
There is a big difference between some young person who doesn't want to work and an older person retired (maybe after working 40 years).
 
There is a big difference between some young person who doesn't want to work and an older person retired (maybe after working 40 years).

Yeah there is - the older person has a property with (presumably) large amounts of equity built up over 40 years while the young person doesn't.
 
I've had similar thoughts to what (i think) Aaron is saying. Firstly, here's my reminder that I don't know what I'm talking about.
Secondly, I am similarly baffled my the idea of intentionally avoiding earnings to preserve ones right to a hand out.
It's like when I was at uni, all these students I knew refused to work because if they earnt too much, they would stop getting centrelink payments. Somehow I always had way more money than them. Maybe because working a couple of nights a week payed way better than sticking your hand out at the dole office.
I'm currently renting a house at a ridiculously low rate because the owner doesn't want the income to affect his pension. Surely it would be of greater benefit to just charge market rate rent. How much is this magical pension that it must be preserved at all cost? Or how much does earning an income affect it?
 
I've had similar thoughts to what (i think) Aaron is saying. Firstly, here's my reminder that I don't know what I'm talking about.
Secondly, I am similarly baffled my the idea of intentionally avoiding earnings to preserve ones right to a hand out.
It's like when I was at uni, all these students I knew refused to work because if they earnt too much, they would stop getting centrelink payments. Somehow I always had way more money than them. Maybe because working a couple of nights a week payed way better than sticking your hand out at the dole office.
How much is this magical pension that it must be preserved at all cost? Or how much does earning an income affect it?
I am similarly baffled my the idea of intentionally avoiding earnings to preserve ones right to a hand out.

Me too, but I don't recall that being advised. I certainly did not.
I'm currently renting a house at a ridiculously low rate because the owner doesn't want the income to affect his pension. Surely it would be of greater benefit to just charge market rate rent.
Again I would never advise this, but in today's markets who could say a pensioner who keeps cash in a safe, low yielding, bond is deliberately avoiding income? [different scenario for sure]. This is why there is the concept of "deeming", where CentreLink assumes a certain return is being achieved, even if the cash is sitting in a cheque account where no interest is being paid. Your landlord may be costing himself money because, I assume, he DIDN'T sit down with CentreLink and get the facts. CL staff are NOT trying to unfairly save their employer money, they try to get people the best outcome they can within the regulations.

Thinking about your landlord, his ACTUAL rental return may not be considered by CL, merely ATO. CL probably use the "deemed" return only.
 
I don't think it is as much of a case of wanting to live off the pension, it's the benefits they go along having a pension (even $1 of it).

A Pensioner Concession Card entitles you to reduced cost medicines under the Pharmaceutical Benefits Scheme (PBS).

You may also be entitled to various concessions from the Australian Government—these could include:

  • bulk billing for doctor’s appointments (this is your doctor’s decision)
  • more refunds for medical expenses through the Medicare Safety Net
  • assistance with hearing services through the Office of Hearing Services
  • discounted mail redirection through Australia Post

Note: You may get some of these Australian Government concessions for a dependent child.

You may also be entitled to various concession from State and Territory Governments and local councils—these could include:

  • reductions on property and water rates
  • reductions on energy bills
  • a telephone allowance
  • reduced fares on public transport
  • reductions on motor vehicle registration
  • free rail journeys

So all up, there are benefits that should be available to retirees who plan their retirement appropriately.
 
well FYI - my mum has retired BUT she is not recieving anything from government or pension or anything.. i m simply helping my mum to plan it properly so she does not have to get tax just because she has a large deposit from selling her only house...

and Terry is RIGHT, there s a BIG A$$ difference between a young person who doesnt want to work and someone who worked for a long time...
 
I've had similar thoughts to what (i think) Aaron is saying. Firstly, here's my reminder that I don't know what I'm talking about.
Secondly, I am similarly baffled my the idea of intentionally avoiding earnings to preserve ones right to a hand out.
It's like when I was at uni, all these students I knew refused to work because if they earnt too much, they would stop getting centrelink payments. Somehow I always had way more money than them. Maybe because working a couple of nights a week payed way better than sticking your hand out at the dole office.
I'm currently renting a house at a ridiculously low rate because the owner doesn't want the income to affect his pension. Surely it would be of greater benefit to just charge market rate rent. How much is this magical pension that it must be preserved at all cost? Or how much does earning an income affect it?

You can only get a pension if your income stream and net assets are below a certain amount. The pension is highly valued not for the actual monetary amount that your receive but all the associated perks. Discounted pharmaceuticals, discount travel, aged care concessions, waiving of many bank charges, etc. This is why many pensioners or wannabe pensioners will take great care in preserving their elegibility for pension even to the point of discounting your rent.
 
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