I’m a retiree living off my super. Where should I invest $450,000?

I am a retiree who has an SMSF and draws a pension from the fund. I have just sold an investment property which will provide me with a net sum of about $450,000 after expenses. Where should I invest this sum? I already have about $860,000 in a share portfolio and $300,000 in term deposits.

Assuming you are aged under 75, don’t forget to make the maximum concessional contribution of $27,500 into super to reduce the capital gains tax on the sold property.

When it comes to investing in retirement, super is often a safe bet.Credit: Louie Douvis

Super is also useful for its tax advantages, so you can then make a $110,000 non-concessional contribution in 2022-23 and, after July 1, a further ‘bring forward’ amount of $312,500, taking the total to $450,000, always assuming you are under your personal transfer balance cap.

Your pension fund is untaxed, as is your pension in your hands. You can always withdraw the money if you later need it elsewhere.

I am in my late 40s, single, and working full-time with two houses in NSW. The first one, mortgage-free, is in Sydney which I bought in 2008, and lived there for 13 years. The second one is in the Blue Mountains, which I bought in 2021, and moved in while renting out the Sydney house. This second house is dual dwellings and I rent the bigger part of it out. I thought I would keep the house in Sydney as long as I can, but now I think maybe it’s wiser to sell it as I’m subject to land tax because both of my houses produced income. From what I understand, if I sell the house in Sydney within six years I can nominate it as my principal residence and receive full CGT exemption. However, for land tax, I need to select the Blue Mountains house as my principal place of residence to have a partial land tax exemption. Am I still entitled to a full exemption if I sell my house in Sydney within six years from the day I rent it out, even if Revenue NSW considered my house in the mountains as my principal residence?

Interesting question. Capital gains tax, or CGT, is based on federal law while Revenue NSW implements state law.

Under CGT rules, you can claim a home as your main residence for up to six years after moving out, provided you don’t claim another home to be exempt from CGT. This is not affected by any decisions you make regarding land tax.

Under NSW land tax rules, if you rent out part of your home, you can still claim a land tax exemption so long as the leased part of your property is one flat or rooms or both. If you lease a larger part of your home, you can receive the partial exemption you mention.

Check with Revenue NSW. As you know, land tax is determined by which property you occupy on December 31, so this is not related to your selection of a main residence for CGT purposes.

• Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

If you have a question for George Cochrane, send it to Personal Investment, PO Box 3001, Tamarama, NSW, 2026. All letters answered.