I don't see the point of compound interest. Why is it so great?
Vanguard says if you set up an Auto Invest plan using your Vanguard Personal Investor Account, your cost base is tracked automatically.
Each year, Vanguard will issue you an annual tax statement that pulls together all the relevant details for the ATO – interest, dividends, distributions, capital gains or losses, and any cost base adjustments. The statement includes tax guide references and is available after 30 June under the Statements tab in your account.
Regarding the age pension and the assets test: I'm thinking of buying a new motorhome for around $200,000. How does Centrelink value it – both immediately and over time? I've been told not to overvalue assets, but at the same time, I don't want to undervalue it and get into strife with Centrelink. Your guidance would be appreciated.
Centrelink requires pensioners to value their assets at market value, which is defined as the amount you could reasonably expect to receive if you sold the asset on the open market. You're not required to obtain a professional valuation, and Centrelink will generally accept a reasonable estimate.
It's important to regularly update the estimated value of depreciating assets such as home contents, motor vehicles, boats, and caravans. Notifying Centrelink of reductions in value over time can help increase your age pension entitlement.
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In the case of a $200,000 motorhome, around $20,000 of the purchase price will be GST. So, a reasonable starting estimate for Centrelink purposes might be in the ballpark of $180,000.
I recommend revisiting the valuation every six to twelve months to ensure it remains in line with market value. Failing to notify Centrelink of depreciation may result in you being underpaid.
My father died several years ago, and my mother has recently entered aged care. I understand we have two years to sell her house before it affects her pension. However, I couldn't find anything about the CGT implications for me and my siblings if Mum dies before the house is sold – specifically, the difference between the estate selling the house versus us inheriting the property. The plan is to sell the house and inherit the proceeds, not shares in the property itself – which I believe avoids CGT.
Julia Hartman of Bantacs tells me that if the house is being rented out, you can continue to cover it with her main residence exemption for up to six years.
If it is not earning income, the period is infinite – assuming she was fully covering it with her main residence exemption before moving to aged care, and it was not producing income while she lived there.
Then, when she dies, if it has not been used to produce income (or only for six years), it is treated the same as if she died while still living there, and you still get the two years to sell.
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