$50,000 Superannuation Cap to Boost Property Investment

A change in Australia's superannuation regulations which becomes law today limiting superannuation contributions to $50,000 could be a further catalyst for a return to property investment and renovation.

Robert Caulfield

Robert Caulfield, Managing Director of Archicentre said one million baby boomers set to retire in the next ten years who have had their potential superannuation contributions slashed by 50% from $100,000 to $50,000 will need to look for other areas to invest.

"People should take professional advice from their accountant as a first step in undertaking the renovation for retirement strategy to ensure their taxation and investment situation is appropriate.

"Renovation has a threefold advantage for baby boomers - investment in the family home does not attract capital gains tax when it is sold, people get to enjoy a better lifestyle and could take the opportunity to turn part of their home into a future revenue stream by creating a self contained living area for rent.

Mr Caulfield said the major issue facing baby boomers 'Renovating for Retirement' is careful planning with the renovation design being clearly matched to the long term aim of producing revenue either in the form of rent or capital gain.

"Apart from the design, accurate paper work for tendering and project management is needed to ensure the project comes in on budget to maximise the investment potential.

"Home owners need to recognise that renovating for profit to build a retirement nest egg is similar to running a business where costs and profits need to be managed accurately and constantly monitored."

Archicentre finds many retirees who set out to renovate for retirement run into problems by purchasing a home for renovation without having the property inspected professionally, only to find that they have purchased a lemon with faults that require thousands of dollars to repair before they start.

"Providing people do their homework, a well designed and managed renovation project that is completed on budget can create a major boost to a retiree's assets."

The opportunity to develop a separate independent living area as part of the renovation that can be rented out is a strategy that can provide the retirees with extra income from their home when they are at a stage of downsizing or presents a value added aspect when selling the property, Mr Caulfield added.

www.archicentre.com.au

Media Enquiries:
Robert Caulfield Managing Director Archicentre (03) 9819 4577 Mobile: 0412 381 306
Ron Smith Corporate Media Communications (03) 9818 5700 Mobile: 0417 329 201

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