Why most People with Only Property Retirement Income will Struggle?

No not OZ, Asia.

Re oz, Agree tax is important.

 

Payin'g for police stations...hmm..is that like paying off police.

 

well someone needs to supplement their salaries..

 

No thanks...this is exactly why I don't like corrupt countries too much BS....not sayin' Australia is not corrupt but it does not affect me as much.

 

This is different to your comment that Capital gains tax could be reduced from 49% to 15%.

 

Let me clarify....instead of paying 49% on 50k of 100k gain after 50% discount (assuming two people contribute 25k a piece into super)..

They pay $3750 each based on 15% ingoing tax for Super instead of $12,550 per person.

So the net savings is about $8800 taxes...dems how i worked it out....as I said I ist not a tax expert....DYOD

 

So instead of paying 23.5% tax they would pay about 15%?

 

ON the original 200k CG yes...it work to 13.5% exactly...but I thunk you used top rate of tax which is indeed 16%

Here are the numbers:
50% Capital gains exemption so 100k table.
50k (25k each assuming husband and wife) put into super at 15% contributions tax - $3750 x2 = $7.5
Remaining 50k (25k each) tax paid at 39% assuming each earns 80k = $750 x 2 = $19.5

So total of 27k in taxes out of 200k which is 13.5% exactly...but I think you based it on the top rate of tax so 16%

 

I think you are talking something different to me.
The marginal tax rate for a capital gain is a max of 23.5% for assets held longer than 12 months. not 40 to 49% as you mentioned. This is what I was referring to.

 

Yes only because of the 50% discount I get that...so instead of (47% not including the medicare levy) it is 23.5%...we are mincing words here....semantics..I really only wanting the end state tax..which is either 13.5 or 16%.

So a great outcome if people know what they are doin'

 

Taking it out of the offsets, would increase debt, which would reduce the income.

 

You can also lower this if you have newer properties with large depreciation banks. So if you annual depreciation is 60k by structuring you could reduce your liabilities further to almost zero. No advice..you need to plan....

 

Yes, but that interest would be deductible.

Most people can't borrow to contribute to super and claim the interest...

 

Yep...and very short sighted given in 5 years the income would be tax free....and as you sell assets you move it into the Super side so when you do pull it out as income it is abolutely tax free,

The income on the rental side is not tax free and just the normal tax rates apply. So oyu get 18.5k odd tax free...then it is taxed.

In skatoos case...if she has say 70k with 35k split equalty with hubby..is still paying about $3500 tax. I get that she may have deductions via property but the income is also variable as project has maintenance.

Where as in super..once you get say $1m in super...you can pull 4-5% forever. That would give you most of the income. The remainder can come from rentals and NRAS ..that could be over 30-40k...that gives income certainty.

 

The 25K concessional limit per annum includes the employer contribution of 9.5% ( or more if they work at an employer such as a Govt department paying 12,13,14,15 or even 16% for example) so you cant calculate the entire 25K. You can only calculate the salary sacrificed amount. If someone earning 80K was receiving 9.5% employer super contribution ( 7.6K) they could only sacrifice an additional 17.4K, so you'll need to re-run your numbers.

But ultimately yes, they will save on some tax if they are able to divert some income from a high personal marginal tax rate to a 15% Marginal Tax Rate.

 

Yes that is correct 25k is net of any employer contributions...and also any rebates that a super fund may give back..as in the case of my super fund. As they discount an return money back so instead of paying 2500 pa...they credit back 1250k..which is counted unfortunately to my super contribution c'est la vie.

 

Aussie Investors just get eaten alive by taxes instead..... stamp duty, land tax, cgt, gst if developing........ouch

 

Yes, I'm aware of that.....but the income we get from our portfolio, we use to live on. Putting a chunk into Super, means we can't spend that for many years to come. We didn't retire to cut our income, you know.

Well, it's quite a bit more than $70k....but you are right, it is split between the both of us. Plenty of deductions, so tax is minimised. I'm not willing to put $25k of it into Super so I can withdraw at a later date. I need it now! There's lots of holidays to be had, you know.

 

Let me ask youse....you have sold a few over the last few years....did your accountant ever talk about reducing tax via Super?

Because you have to look at it this way...if you are 5 years away...why no tip into Super....because selling one a year minimizes tax..and unless you go off the reservation and spend 120k pa...annum it ain't going to matter..this is what I call wood from trees syndrome..I am not sayin' its you but I see a lot of people with alot of assets but can't see past the now...and before you know it the now quickly becomes the future...if youse get my drift.

Its a free country...so hows youse makes youse decision is how youse make 'em.

 

Yep ..but lots of options to structure....in the USof A the county taxes get ya...