I'm over 75, have a self-managed super fund and can borrow from the bank at 6.2 per cent. Telstra is yielding 10.7 per cent, including franking. It's likely to maintain its dividend rate for the foreseeable future since it will be many years before the mooted changes take effect. Do you see any problem with borrowing in the fund to buy Telstra? If not, could you suggest an upper limit as a percentage of the fund's total value?
There are various quality shares paying high dividends but you're the only one who can decide if it's worth borrowing to buy them. Remember, there are severe restrictions on super funds borrowing. Monica Rule's April 2012 newsletter explains it in full. See sunshinepress.com.au and look at "Latest News & Links". You may find it is simpler to borrow in your own name.
If my 27-year-old son inherits a beach house from his father's estate, does he have to pay capital gains tax when he sells it? The beach house (bought in 1997) was rented out for 10 years and returned to being my ex-husband's principle place of residence three years ago. How is the CGT assessed, if indeed there is any to pay?
Thanks to section 128-15(4), any previous capital gains liability is negated if it was his father's principle residence at the time of death. Therefore, your son will be deemed to have inherited it at market value at the date of death and can sell it CGT-free within two years of the death.
Noel Whittaker is the author of Making Money Made Simple and numerous other books on personal finance. His advice is general. Readers should seek their own professsional advice. Email noelwhit@gmail.com.
