Aaron and Emma, both 63, are contemplating retirement.

They have done very well for themselves and built up a property portfolio over their working life despite their modest incomes.

Their investment property portfolio is valued at $7m, and they intend on selling the entire portfolio to then fund their retirement, as they no longer want to have the trouble of managing these properties.

These properties are their retirement nest egg and their plan has always been to sell them and live off the proceeds once they retire. They came to Financial Foundations to confirm their retirement plans and explore other viable options for retirement.

Through our conversations to understand their current situation as well as their goals and aspirations, we discovered that they have 4 investment properties held jointly, another property within their Self Managed Super Fund (SMSF) and their principal home. Their original intention was to move in to one of their investment properties at retirement as it was a better size for them and then sell the remaining properties (excluding the SMSF) to fund their retirement.

Further inquiries revealed that they had one property on the market already, with the remaining four to be listed in the following 6 months. I asked where the sale proceeds would go, and they told me they would keep it in the bank and slowly draw on it as they needed it to meet their expenses in retirement.

I discussed with them the Capital Gains Tax (CGT) consequences as a result of selling five properties in the space of six months. They were shocked by the CGT implications as this is something that they had not considered nor had their accountant mentioned.

We recommended a selling timeline over the next few years to help reduce the CGT that they would need to pay to the Tax Office. This ensured that more of the sale proceeds ended up in their pockets for them to enjoy in retirement.

After considering their financial goals and understanding their comfort level with risk, we proposed an investment strategy with the sale proceeds as opposed to their original plan of leaving money in the bank which would not provide them with an appropriate real return over the next 30 odd years of retirement. This would ensure longevity of funds to provide them with the income they need in retirement.

Aaron and Emma were relieved that they made the decision to meet with us before they went ahead and sold all their properties.

They greatly appreciated our expert advice and experienced first hand the value of seeking professional financial advice. This has helped them to avoid a costly mistake and has saved them hundreds of thousands of unnecessary tax.

By carefully managing the sale process, we have been able to deliver a significantly better outcome for them.