‘Should I put my $200K inheritance into super or use it to pay off my mortgage?’

May 24, 2019
Whether to contribute additional sums to superannuation or not can be a complex financial decision. Source: Getty

Q. My wife and I both have superannuation savings, although my account is larger. We’ve both been retired for around 12 years. We have an investment property that we own outright. Is it possible to put this property into super, as in sell it to ourselves? Are there any tax advantages? We’re self-funded retirees.

A. You cannot transfer a residential property into a self-managed superannuation fund, but even if you could, there would be likely to be capital gains tax on the transfer. I suggest you think about the future potential of the property, what capital gains tax would be payable if you did sell it, and then make a decision to buy or to hold. If it has good potential, and is paid off, it may give you a good long-term income stream.

Q. I am about to come into quite a decent amount of money from my father’s estate. My question is: I’ve been told I should deposit the whole lot into my superannuation with Australian Super. But my husband and I are paying off our home and we have $90,000 to still pay, so should I pay that off first instead. Doing so would leave me with approximately $200,000, so is that then too much to put into my superannuation?

A. If you pay the money off your mortgage, you will effectively earn the mortgage rate, probably around 4 percent. A good superannuation fund may do better than that. But given the relatively small amount of the mortgage I think the simple solution may be to pay it off. The sum of $200,000 is not too much to put into superannuation but take professional financial advice because it may be possible to contribute part of it as a concessional contribution and claim a tax deduction.

If you have a question for Starts at 60’s money experts, email it to [email protected].

Important information: The information provided on this website is of a general nature and for information purposes only. It does not take into account your objectives, financial situation or needs. It is not financial product advice and must not be relied upon as such. Before making any financial decision you should determine whether the information is appropriate in terms of your particular circumstances and seek advice from an independent licensed financial services professional.

Financial information that's key to your retirement lifestyle

Sign up to our weekly newsletter for more great financial information

Leave your comment

Please sign in to post a comment.
Retrieving conversation…