If you’re approaching retirement, one big question often comes up:“Should I sell my investment property before retiring?”For many Australians, property is one of their biggest assets and deciding whether to keep it or sell it is a major financial decision.The answer depends on several factors, including your retirement income needs, tax situation, Age Pension eligibility, and long-term goals.
In this guide, we’ll walk you through what to consider before making a move, and how to make the decision that best supports your retirement lifestyle.
Why This Question Matters
Property can be a powerful wealth-building tool, but in retirement, the goal shifts from growth to income stability.As you stop earning a salary, your focus becomes how to:
- Generate steady income,
- Reduce ongoing costs, and
- Simplify your financial management.
Your investment property might help you achieve those things or it might make retirement more stressful if it’s costing you more than it earns.
Should I Sell My Investment Property Before Retiring? Let’s Break It Down
There’s no one-size-fits-all answer, but here are the key areas to evaluate before you decide.
1. Your Income Needs in Retirement
Start by asking:“How much income will I need once I retire?”If your property provides reliable rental income that covers its expenses and adds to your cash flow, keeping it could make sense.
However, if:
- Your rental income is low,
- Maintenance costs are high, or
- You’re relying on property appreciation rather than income
Then selling before retirement could help you free up capital to invest in more flexible, income-generating options (like super or an account-based pension).
Example:
If your investment property is worth $700,000 but only nets $15,000 a year after costs, selling it and investing the proceeds might give you more predictable returns and easier cash flow.
2. The Impact on Your Super and Pension
Many retirees don’t realise that keeping an investment property can affect their Age Pension eligibility.The value of your investment property (excluding your home) is counted in the assets test for the Age Pension.
If you sell the property and put the money into your superannuation, that balance is also assessed once you reach Age Pension age (67).
However, managing it through super can offer:
- Tax-free income once converted into an account-based pension,
- Greater diversification, and
- Easier access to funds.
Tip: If your super is still growing and you’re not yet 60, speak to a financial adviser before selling there may be timing advantages.
3. Tax Implications (Capital Gains Tax)
When you sell an investment property, you’ll likely pay Capital Gains Tax (CGT) on any profit.The good news? If you’ve owned the property for more than 12 months, you may qualify for a 50% CGT discount.
Your CGT liability depends on:
- The difference between your purchase price and selling price
- How long you’ve owned the property
- Your total taxable income in that year
If you’re retiring soon, you could plan the sale in a year where your income is lower potentially reducing the tax you pay.
Example:
If you sell after you stop full-time work, your taxable income might fall, making the CGT bill smaller.
4. Maintenance and Stress Levels
Owning a rental property comes with ongoing work from repairs and tenant management to council rates and insurance.If you’re looking for a simpler, stress-free retirement, selling may help reduce the day-to-day hassle and financial unpredictability that comes with being a landlord.Alternatively, you could delegate management to a property agent, but this will reduce your rental returns slightly.
Ask yourself:
“Do I want to spend my retirement managing tenants or living life on my terms?”
5. The Property Market Outlook
Timing matters. If the property market is strong and prices are high, selling before retirement could lock in capital gains and provide liquidity for your retirement savings.However, if the market is soft and rental demand is solid, holding the property a little longer may yield better returns.
A professional valuation or advice from a property strategist can help assess whether now is the right time to sell.
Pros and Cons of Selling Before Retirement
Here’s a quick overview to help you compare both sides:
| Pros of Selling | Cons of Selling |
|---|---|
| Frees up large amount of capital | May trigger Capital Gains Tax (CGT) |
| Reduces maintenance, stress, and risk | Loses potential rental income and future growth |
| May improve cash flow and liquidity | Harder to re-enter the market later |
| Can simplify Age Pension eligibility | Timing the market can be difficult |
Alternatives to Selling
If you’re not sure about selling right away, consider these options:
- Downsize or Sell One Property: If you own more than one, you can sell one and keep another for income.
- Refinance or Draw Equity: Access part of your property’s value without fully selling it.
- Rent Out Part of Your Home: Turn unused space into income through downsizing or shared living.
- Transfer Proceeds Into Super: If eligible, use the Downsizer Contribution Scheme to boost your super by up to $300,000 (each for couples).
FAQs:
1. Will selling my investment property affect my Age Pension?
Yes, the proceeds from the sale are counted in your income and assets tests, which may temporarily reduce your pension.
2. Can I put the sale proceeds into my super?
Yes, if you’re over 55 and meet eligibility, you can use the Downsizer Contribution to add up to $300,000 per person tax-free.
3. What if I keep the property and live off the rent?
That’s possible but ensure the income after costs is enough to cover your lifestyle needs and that you plan for vacancies or major repairs.
4. When is the best time to sell?
Ideally, during a strong market cycle or a year when your taxable income is lower (to reduce CGT).
5. Should I get financial advice before selling?
Absolutely. A financial adviser can help assess tax, super, and pension impacts before you make a decision.
What Are the Biggest Expenses in Retirement?
So, should you sell your investment property before retiring?
It depends on your personal situation but the key is to align your decision with your income goals, tax position, and lifestyle plans.If the property is a source of stress, underperforming financially, or complicating your pension eligibility, selling before retirement might be the smarter move.If it’s generating steady, reliable income and fits your strategy, keeping it could still work in your favour.
At Wealthlab, we help Australians make smart, personalised decisions about property, super, and retirement planning ensuring every move supports a confident financial future.
Book a consultation today to discuss your property strategy before retirement and make the choice that’s right for you.