Wednesday, 13 June 2018

Capital Gains Essential For Retirement Village Residents

Access to capital gains is essential to retirement village residents by providing some protection from a slide in their capital value over their occupancy.

A flat or falling property market will pose financial risks for many residents over their period of occupancy.

Retirement village contracts contain various models when it comes to who gets the capital gain. Some contracts grant the resident 100% of the gain, some have a sharing clause such as 50/50 whilst in some contracts the resident gets no share of any capital gain.

Prospective residents need to be aware that contracts that grant capital gains to the residents generally have a clause where the resident is also responsible for capital losses to the same ration of gains.

The following table charts the potential differing impacts on a resident from varying capital gain rates achieved over their period of occupancy. The industry average occupancy period in a retirement village is 7 years.

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