Supply: Picture by Brett Jordan on Unsplash

It’s the nice Australian dream to personal your personal residence. However how does your house have an effect on your age pension or the aged care charges you will be requested to pay?

Eligibility for an age pension and legal responsibility to pay aged care charges are each impacted by your property and revenue. This consists of an evaluation of the place you reside and your possession standing.

The Centrelink (or Veterans’ Affairs) property take a look at begins by figuring out you as both a house owner or a non-homeowner. The next threshold applies to non-homeowners however householders obtain an exemption for the house.

At first look it could appear easy to determine whether or not you’re a home-owner or not, however it’s not all the time that straightforward. The fundamental premise is:

But when solely it was that straightforward! Preparations could also be extra complicated and variations could apply for sure conditions. In some circumstances, you might be thought of a house owner even when you don’t personal the house – for instance underneath sure guidelines for aged care and retirement villages.

What’s the exempt quantity?

In case you are labeled as a house owner, the constructing you reside in will probably be an exempt asset, in addition to as much as two hectares of land (if that land is held for private use). Farmers and folks on rural properties could obtain approval to exempt a larger parcel of land in the event that they meet necessities for the 20-year prolonged land-use take a look at rule. 

What when you transfer out?

If you happen to transfer out of your house, the previous residence often turns into an funding property and is absolutely assessable at market worth. Some particular exemptions embody:

• Transfer to entry care – you might proceed to be a house owner with the house exempt for as much as two years
• Short-term transfer – in different circumstances, if the transfer is just short-term, you might be allowed a 12-month continuation of your home-owner standing. 

Shifting to a retirement village brings its personal algorithm. That is thought of to be a transfer to a brand new residence somewhat than to entry care. Whether or not you’re a home-owner or not will rely on how a lot you paid as your entry contribution and the previous house is assessed as an funding property if nonetheless owned.

If you happen to promote your house, the sale proceeds are assessed relying on how they’re used or invested; except you propose to make use of the sale proceeds to buy or construct a brand new residence. On this case, you may proceed to be a house owner, with a seamless property take a look at exemption, for the primary 12-months. Cash used to pay the lodging prices for residential aged care is an exempt asset. 

Speak to us

Shopping for a house or transferring out of your house are main life choices and might contain important quantities of cash. Entry to recommendation may also help to make sure that you make a completely knowledgeable choice and perceive the impacts in your pension or aged care charges; errors are too pricey to make.  

Accredited Aged Care Professionals^TM, have the experience that will help you perceive the complete implications. 

Sophie Doyle (AR#000470612) is an Aged Care Specialist at Morgans Monetary Restricted (Morgans AFSL 235410 / ABN49 010 669 726); she has a ardour for helping individuals make knowledgeable monetary choices, as they navigate their means by way of retirement and the aged care system. To contact Sophie cellphone 4325 0884 or 0488 521 844.

Disclaimer: The knowledge is of a common nature solely and has been ready with out consideration of your particular person aims, monetary scenario or wants. Earlier than making any choices, you must think about the appropriateness on your private funding aims, monetary scenario or particular person wants. We suggest you see a monetary adviser, registered tax agent or authorized adviser earlier than making any choices primarily based on this info. * Present at 1 October 2021.