Ask Paul: Our investment property is draining us - pay it off with super?

Dear Paul,

Thank you in advance for your advice.

My husband is 67 and retired and I am 57 and still working full time.

We have two investment properties, which are draining us. We own our own home.

My question is: do you think paying out one of the investment properties with my husband's superannuation would be a good idea?

It would take almost all of his $400,000 in super.

We also have more than $100,000 in shares. - Ros

You have me worried here, Ros. Super is a brilliant asset for retirement. It is no hassle, easily accessible once retired and any good, low-cost fund has been generating great returns.

So using super to pay out a property that is "draining" you worries me no end. Interest rates are so low it can't be the interest cost that is a problem, so it may be the properties are high on maintenance or low on rent.

Unless they are providing very high capital growth and you are concerned about a CGT liability, my first inclination is to consider selling one of the properties.

This is a big decision and can't be dealt with without a full understanding of all the facts. Maybe a good start would be with your tax accountant?

But please don't take savings out of a great area such as super to cover a property that is losing money.

Get stories like this in our newsletters.