Georgia is a GP contracting in a suburban practice. She is single, aged 63 and came to see Curve Wealth as she is hoping to retire in the next 12 months.
Georgia has a SMSF which was set up in 2007 on the advice of the accountant she was using at the time. The fund purchased a property for $833,000 using debt which has, subsequently, been repaid through a combination of concessional contributions and rental income.

Georgia has been told by a real estate agent, who recently sold a property a few doors up, that the SMSF property would now fetch around $1.7 million if sold. In addition to the property, the fund also has $70,000 in a cash account and receives rent, after expenses, of $36,490 pa.

Georgia wants to start an account-based pension from the SMSF to fund her in retirement. She knows that she must draw down a prescribed pension minimum each year, and she estimates she needs about $90,000 p.a. to live on. She owns her own home and has $150,000 in a term deposit.

Georgia approached Curve Wealth as the income of the fund is not sufficient to (a) fund the minimum percentage draw down and (b) fund her cost-of-living requirements. She is worried that, if the SMSF is obliged to sell the property, a large amount of capital gains tax will need to be paid, depleting her retirement nest egg. She is uncertain of what her options are.

Owning direct property in a SMSF can be a good way to build wealth while in the accumulation stage but can pose a challenge when the members of the SMSF reach retirement. We quite often find clients in a similar predicament to Georgia in that they have accumulated the wealth but now do not have the necessary cash flow.

Working with Georgia we put in place a strategy which:

• Reduced the capital gains payable on the sale of the property to zero;
• Explored thoroughly the options available around setting up an income stream for retirement, both within the existing SMSF and via alternative funds; and
• Invested her superannuation appropriately in line with her risk profile and in a way that sufficiently supported her income needs.

Contact us at Curve Wealth if you would like to know more. You can call us on 03 9588 9000 or email us at [email protected]