Q.

My wife and I have a mortgage of $360k on our house that we currently live in which is valued at around $800k.

My wife recently inherited a share portfolio of around $340k and we are not sure if we should sell some of these shares to reduce our current mortgage or just wait and hope that they appreciate.

I am not sure of the tax implications of selling these shares. We are on a single income, my wife is not working, and I earn between $120-140k per year.

We currently pay about $3,300 a month on our mortgage although with the current low interest rates the minimum payment is down to around $2,300. What would you suggest we do?

It is very important that you take advice about the capital gains position of the shares before you sell any of them.

This is because you will be deemed to have acquired the deceased's CGT liability and this will be triggered immediately any of the bequeathed shares are disposed of.

When the CGT position is analysed you may well find that there are profits and losses and it could be possible to choose a mixture of profitable shares and losing shares that when sold would enable the capital losses to offset the capital gains.

If you have a non deductible home loan it would certainly be a good strategy to reduce it by selling some of the shares but you don't want to take any action that would create unnecessary tax.

No matter what you decide to do make sure you keep up repayments of $3,300 a month. Even if you don't reduce the debt from the sale of the shares payments at this rate will have the loan paid off in 13 years.