Cambodia Calling

Hi Barefoot,

My husband and I are Aussies currently living and working in Cambodia on a combined income of $1,500 a month. We own a property in the suburbs of Melbourne worth $450k, with a $307k mortgage and rental income of $1,564 before expenses. On what we are making, the mortgage is a struggle to maintain and we want to continue our life of travelling long term. Should we take the capital gains hit, sell the house and invest in shares, or keep on as we are?

Tim and Claire

Hi Guys,

Sounds like a loaded question to me: you want to sell it, don’t you?

But before you do, let’s look at it from both sides.On one hand, you could keep it. After all, it’s forced savings -- and with interest rates this low, surely you can cover the gap, so long as there’s no major repairs or renos required. I doubt you’re adding to your superannuation in Cambodia, so it’s one asset that’s working for you.

On the other, you could sell it. If it was your home, and it’s been less than six years since you started renting it out (and you haven’t bought another home), you won’t pay capital gains tax under the ATO’s ‘six year rule’. Then you should invest the money in a low cost share fund.

The main thing is don’t rush into it: remember, there are large upfront costs in selling (like agent’s commissions) and buying again (like stamp duty).

Scott