Home' API Magazine : March 2014 Contents 23
API MARCH 2014
MARCH 2014 API
Darwin-based property investor
Philip Jackson has achieved what
many dream of – he has built a
well-performing portfolio that’s low in
debt, rich in equity and delivers a strong
Given he’s looking to retire from his
public service job after the next couple of
years, the now 58-year-old finds himself in
a bittersweet scenario.
“I think my property position is
reasonably rosy but I’m looking down the
barrel of capital gains tax (CGT) and that
worries me a little,” he says.
In total, he owns 10 properties located
primarily across southeast Queensland
with a combined value of $1.78 million,
a total mortgage balance of just $285,000
and an annual rental income of more
“In 1998, I started a proprietary limited
company as an investment tool for my
longer-term future and retirement,”
“I’m looking at retiring some time after
my 60th birthday and I’d like to look at
whether it’s possible to convert all of
my company assets into a self-managed
superannuation fund, reducing my
He’s in the process of selling his longest-
standing investment – a two-bedroom
house in Shoal Water Bay in Western
Australia that he bought for $35,000
in 1993 and estimates is worth about
Arguably Philip’s best performer is a
complex of four townhouses in Churchill,
a suburb in the city of Ipswich, about 45
minutes west of Brisbane. He acquired
them back in 2000 for $400,000 and
estimates they’re worth an impressive
$1.2 million today.
That beauty brings in $1140 in weekly
rent and is the only property that’s still
mortgaged, albeit with a modest loan
balance of $285,000.
“My worst is two blocks of vacant land I
bought on Russell Island (in the Moreton
Bay region) in 2002. Although they’ve
appreciated in value significantly, at one
point they were worth much more during
the sales peak before the GFC.”
Philip lives and works in the Northern
Territory, where he relocated in 1978
and has remained since. When he leaves
the workforce, he’s keen to move down
to the place where his investments are
concentrated – Brisbane.
As for what he’ll do with his portfolio
after retirement, he’s tossing up a
combination of selling some assets to
realise their value growth and holding
others to continue enjoying the income.
“I don’t have a figure in mind for
(ongoing cash flow in retirement) but
I think I’d like to get somewhere in
the vicinity of $75,000 to $100,000 per
annum,” he says.
One final idea he’s considering is
buying a retirement apartment in
While he’s still earning an income, he’s
open to the idea of adding to his portfolio.
If there was scope, he’d like to continue
investing post-retirement too.
Philip, Philip, Philip! Where oh where did
your tax advice come from? Whoever
offered the advice needs their head read.
However, as they say in the classics, it’s
time to move on.
Tax advice is critical to your long-term
retirement plans because you’re currently
structured with most of your assets under
a company structure. Companies don’t
receive any capital gains tax (CGT) relief,
whereas assets under individual or trust
names receive a 50 per cent discount.
Superannuation funds receive a 33 per
cent discount. The only requirement on
these discounts is that assets need to be
held longer than 12 months.
¿ THE TAX ISSUE
To totally restructure your affairs into a
CGT effective one will cost you about
25 per cent in tax, which isn’t a path I’d
advise you go down.
A qualified financial adviser may suggest
a vastly different investment mix for
your portfolio, which may influence this
decision. Still, I’d prefer to concentrate on
your ability to retire comfortably within
the current investment mix.
I would also suggest from the outset that
any attempt to purchase a property in
Brisbane in the short term would also be
not part of my recommendation.
Why is this the case? Effectively,
you don’t know which specific area of
Brisbane you would like to live in and how
this will affect the family, so it would be a
wise lifestyle decision to rent in an area
of Brisbane first and see what this is like
before attempting to buy.
Further, the tax cost on buying a house
to live in will again be substantial because
you and your family don’t currently have
API MARCH 2014
MARCH 2014 API
PHILIP JACKSON \\ ROADMAP TO WEALTH
Links Archive April 2014 February 2014 Navigation Previous Page Next Page