“Should We Buy A House Together?”
I’m in my 60s and started a new relationship a few years ago. When my youngest moved out recently, my partner suggested that I sell the family home and that we buy a smaller place together. What do I need to think about before I do that?
– Patricia, Prahran, Vic
There are a few things to consider, including your inheritance plans for your children. Buying a property with a new partner when one or both of you have children can lead to complications when one of you dies.
Much depends on how you structure the ownership. This is something you should talk to a lawyer about before you buy anything. The two main options are:
Joint tenants This means that you both own equal shares of the property. When one partner dies, full ownership automatically transfers to the other partner, and your children will have no right to inherit.
Tenants in common Under this structure, the property may be divided equally or percentage wise. For instance, you might own, say, 60 per cent, and your partner could own 40 per cent. In this case, your share doesn’t immediately pass to the co-owner on your death; you could choose to pass it on to your children. But be aware of what could happen if you die first and your partner is still living in the house, which now partly belongs to your children. How might that work?
Both these ownership options come with risk, so it’s important to seek financial and legal advice before deciding on a way ahead. My book, The Joy of Money, contains more information on how to navigate this course.
A second important consideration is how to invest any money left over after selling your old home and buying a new one. You want to look at assets that grow in value and provide income. Topping up superannuation may be a good choice. If you are around 65, depending on your financial situation, downsizer super contributions may be an option. These can apply when you sell your home at age 65 or older. Your financial adviser can explain whether this applies to you.
And think about the potential impact on your eligibility for Centrelink benefits, particularly the age pension? While your home is not included in the assets test, the additional money from the sale of the original family home may affect the amount of government benefits you can receive.
Take a careful look at all of these implications and before you decide whether this is the right step for you.
By Kate McCallum, financial adviser and author of The Joy of Money; multiforte.com.au
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