Your home and the Age Pension rules:
Frequently Asked Questions
A couple of weeks ago Jock asked our team the reason why he needed to prove ownership of his home for 20-plus years, in order to qualify for an Age Pension.
Our Customer Services Team leader, Steven Sadler was able to explain. This then raised quite a few other issues that can have a profound impact on the way your home is viewed by Centrelink. Yes, your home is exempt from a means test, but this doesn’t necessarily mean it has no effect on your final entitlements. It does. Here’s a brief summary of the way the rules work and the things you need to know to stay on top of your eligibility.
What’s with the 20 year proof?
Jock asked:
“I am applying for the age pension but for some reason I have to prove that I have lived in my house for 20+ consecutive years. Why do I need to do this, and how?? Also, I have not lived in my house all that time, I travel around and stay in different places regularly, but my house is my home. Is that a problem?”
Steven replied:
“This question is relevant when an applicant’s home is on land of two hectares or more. Theoretically the extra land (say Jock’s holding is five hectares, then the extra three) could be assessed as income earning and thus defined as an asset. Centrelink requests proof that you have lived in your house for more than 20 years as this is one of the factors used to determine whether your property will be assessed as an asset. So it is important that you make every effort to prove this to avoid having your pension reduced. In terms of how to prove it, Centrelink is reasonably flexible and as long as you can provide any document that proves you were the owner 20 years ago, this should suffice. This could include an old council rates notice or utility bill, or invoices for work done at the property that are addressed to you (or your partner).”
We’re Grey Nomads, so don’t own a home, right?
That was the question posed by Susie and Marlene. The answer isn’t quite so straight forward. As they have been living in their Recreational Vehicle (RV) for the past 18 months since they started travelling, the RV is defined as their primary residence, i.e. they are indeed homeowners. As such their Age Pension entitlements are calculated using the lower asset threshold which applies to couple homeowners ($419,000) as opposed to the higher rate if they were non-homeowners ($643,500). This is also the case with people who are living on a houseboat. The vessel is viewed as a primary residence by Centrelink.
What about Granny Flats?
Which leads us to this increasingly popular form of housing for some older Australians. The ownership of the granny flat is often far from clear. Sometimes an older parent has swapped their original residence for the right to live in a newly constructed dwelling, rent free on the same land. There is a lot riding on the contractual arrangements, if money or titles have changed hands and/or if rent is being charged. There are no simple answers, but in essence, if the granny flat is your principal place of residence and has been shared with you in a way that is deemed commercial, then it is likely you will be considered a homeowner, at least to a degree.
How long do you have when you sell?
In theory when you sell your (asset test-exempt) family home, the funds would immediately be considered as assets. But if that was the case, then those on an Age Pension would be discouraged from ever downsizing. Instead, there is quite a lot of leeway for those who are selling up and need some time and headspace to then repurchase or use the proceeds in a different way (maybe even for a Downsizing Contribution into their super). For this reason, for home sales from 1 January 2023, the asset exemption period is up to 24 months. Depending on the specific circumstances, some further exemptions of up to 12 months might also be granted. The maximum assets test exemption period is 36 months. Sale proceeds to be used to secure a new principal home are deemed at the lower rate only.
Of course there are many more rules attached to your home, your mortgage, super and Age Pension eligibility. The Q&A above are asked frequently, but we also receive many questions related to the relative merits of paying off a mortgage or leaving the funds in super. The right strategy depends entirely upon a host of factors, one of which is your home and whether it is owned outright. Other factors include your age, your spouse’s age if you are partnered, as well as your savings, income and asset levels. There’s a lot to consider.
If you have specific questions that you want help with to assess how an alternative strategy could affect your financial position and your ability to achieve your goals, Retirement Essentials offers adviser-led strategy consultations on a range of topics. In these meetings you are able to join one of our financial advisers online where they assess your current situation and show you what an alternative option may look like. These include:
- Retirement Forecasting (understanding spending options during your retirement journey).
- Understanding more about super (there are many options available to maximise income).
- Maximising your entitlements (making the most of your financial resources and Centrelink)
- Understand impacts of your home mortgage (can it increase your Age Pension and / or improve your income in retirement?)
- Younger Spouse strategy (How moving assets to a younger spouse’s super can increase your entitlements)
Are there any pension rules about the cash we are going to use to build a new house? As the build progresses I will become eligible for the pension. If we had sold our house and land there is a time frame to get another house before the cash is counted as an assett. But we are demolishing the old house and rebuilding on the same spot. We have the cash now.
Hi Robert, thanks for reaching out! You are correct that there are exceptions applied to the money you receive from selling your primary residence however this is so that people who were previously eligible for the Age Pension do not have it cancelled, just to become eligible again a short time later when they use the money from the sale buy/build a new primary residence. In your situation there is no exemption that can be applied to the funds you intend to use, even if you have evidence of the amount you will be spending. You will need to wait until you have spent the money and are under the asset threshold to then lodge your claim.
We have lived for 19 years on a 37.5 acre hobby farm which has never produced income. Does that mean that after 20 years my pension can be reassessed, or will it make no difference to my pension amount?
Hi Denelda, thanks for reading through the Q&A! It is possible that once you reach 20 years of ownership that your pension amount will increase however there are a few factors that are taken into account not just the length of ownership so I couldn’t guarantee it. To discuss the specifics it would be best to book a confidential consultation HERE so we can properly support you.
A pensioner decides to downsize and puts down a deposit of 200K on an “off the plan” high rise that will not attract any interest. Is this deposit deemed as an asset by Centrelink?
Hi Christopher, thank you for seeking support! It depends on where the $200K comes from. If it truly is from “downsizing” then that means the person sold the current primary residence and is using $200K of the profits made via the sale with a plan to use more upon completing. IN this scenario no the $200K nor the remaining balance intended to be paid for the high rise will not be counted as assets however they will still be deemed to earn income. If however someone simply chose to use $200K of their existing money, meaning they have not sold their current primary residence, then the $200K would not longer be counted as an asset however any remaining balance to be paid will be assessed until the money is spent. So either way the $200K will no longer be counted as an asset but there may be a further exemption applied if it is downsizing.
I’m a pensioner and have sold my house I’ve told Centrelink that the proceeds are in my bank account I know this will be deemed at a low rate for up to two years but if my original amount reduces how is the deeming amount affected?
Hi Merrilyn, thanks you for your question! The deeming rate is applied to the total balance of your financial assets. Therefore as that balance reduced so to will the amount of income you are deemed to earn on it. You do need to update Centrelink as the balance reduces though as contrary to popular belief they do not have live access to your bank balances and rely on customers to give them new statements to show how their balances have changed.
My mother has a home worth approx $1.3 million. She is permanently living with me since November. Does she have to sell her home does this effect her pension?
Hi Phyllis, yes you/your mum should update her living situation with Centrelink because if she owns a property that she is not living in then that property is an assessable asset.
My mother passed away recently and I will soon sell her house, and the proceeds will be divided between 6 children.
I am on a aged pension, how will this affect my pension payments?
Hi William, our sincerest condolences on your Mother’s passing. Once the inheritance has been divided you should provide Centrelink with a bank statement to show your new balance. There are a couple of factors to be considered so we cannot give you a definite yes/no answer but it is possible your pension will be impacted so you should update Centrelink within 14 days of receiving your share of the money. It might be a good idea to check/update all of your other income and asset values that Centrelink has to ensure you are getting the correct amount of Age Pension.
Does your residential house being used as a registered business office affect the age pension? No money will change hands and the house is not a workplace
Hi Rob, thank you for your question! Generally speaking no however there are some situations where it can, it depends on the type of work you do and how the room(s) in your house are used. To understand your situation specifically and advise you on the potential impacts (if any) we’d need to have a confidential consultation with you to discuss everything in detail. CLICK HERE if you’d like to discuss it further.
Hello
My concern is regarding the downsizer contribution to our superannuation policies for my wife and I.
I have been advised that you must have owned your property for a minimum of 10 years and lived in it at least some of that time.
Otherwise you would pay CGT on the contributions.
Is there an alternative plan that could be used to sell our 2 acres and downsize?
We have lived in this property for approximately 8 years plus and health reasons don’t permit us to continue maintaining the property.
Currently we receive a part pension each but would lose that income if we downsized.
Thank you
Greg
Hi Gregory, thank you for sharing your concern with us! You can read more about downsizer options HERE. If that doesn’t give you the clarity you seek then you should book one of our Understanding More About Super consultations so that we can guide you on your options and the pros/cons of each.
What if one owns half a property, shared with another non dependent relative (sister) who owns the other half and may still be working when I turn 67? She’s 3 years younger.
Hi Marian, thank you for your comment! In this situation you would be assessed as a homeowner and as you own the home you live in it is exempt from asset testing so it’s value, your sister’s 50% claim to it, or the fact she is still working, are all inconsequential.
If RV is classed as place of residence and residences don’t form part of assets why does that affect payments?
Hi Linda, thank you for your query! If you live in an RV then the RV is exempt from asset testing the same as a house would be if that is where you lived. So the RV does not directly impact your payments but living in one does mean you are classed as a homeowner and therefore have lower asset thresholds applied to you which a lot of people do not realise.
My mother has recently changed from independent living to a serviced apartment within the same retirement village. There is a lower value attached to the latter and therefore her cash assets will increase but will need to be protected to ensure access to an aged care facility should it be needed in the future. How will all that affect her pension?
Hi Vivien, thank you for sharing! If your mother now has higher assets then it is possible that her pension will reduce but not guaranteed. The two things to consider are whether her assets exceed the minimum threshold or not and then also if her income is of greater value than her assets. To understand it better it would be best to book a confidential consultation so we can understand her situation better and provide you the correct guidance and support. CLICK HERE to make a booking.
I returned to settle in Melbourne in February 2021, so I’m unable to accept pension. However, I’m 66 years old Australian, who is retired without any income. Anyway, am I eligible for any financial assistance from Central ink or government as I own my 2-bedroom apartment in Melbourne CBD with some savings?
Hi Diana, thank you for your comment! If you have been an Australian citizen or permanent resident for 10 years prior to when you left Australia, then the fact that you have only just returned to Australia recently does not preclude you from applying for the Age Pension. Based on your age though, you would not be eligible to apply until 13 weeks prior to turning 67. In the interim you may be eligible for Centrelink’s Job Seeker payment if you were to complete volunteer work at an authorised organisation.
Myself and my wife are selling our house and going in rented accommodation. I am 73 in August and my wife will be 70 in May. What effect if any will this have on our pensions. Will we be taxed on the money we get as it will be used to pay our rent. Thanks Joe
Hi
My partner is 11 years younger than me and I have 3 years to be an aged pensioner. We own our home outright and she has a property investment in her name 80% LVR with rental income and a Super account of $100K+.
I have no super balance.
Am I entitled to an aged pension at 67?
Hi Michael, thanks for reaching out! To determine what you may be entitled to it would be best to LOGIN and complete our Eligibility Checker (left hand side menu) to be certain.
I have only lived in my current home for about 5 years since my divorce. I have no other income, savings of approx $100k and super of $50k. Should I expect problems when applying for the aged pension next year .
Hi Leonie, thanks for seeking our guidance! There are many factors to consider when thinking about potential complications however the issue of how long you have lived in your current primary residence only comes up if the property is +2ha. If it is under this size then it doesn’t matter how long you have lived there.
Hello,
A pensioner recently moved into Residential Care in a nursing home and sold her house and paid the full refundable deposit for her room. The balance from her house sale was more that the deposit but she is still below the assets threshold. Is that deposit paid, counted as assets, or my home.
Hi Colin, thank you for reaching out to us! If the deposit paid was less than the difference between the homeowner and non-homeowner asset thresholds applicable at the time (currently $224,500), then yes it will be counted as an asset still and the pensioner in question would be classed as a non-homeowner. If the deposit paid was larger than the pensioner is considered a homeowner and the deposit is not counted as an asset (neither is the house).
My brother ( born 12.10.1955) and is single has recently been rejected for the age pension based on the value of his property. He lives on a remote 250 acres of mostly unimproved land and runs a small number of sheep and cattle which earns him a small annual income (around $10k). Centrelink valued his property at $400k he has savings and super of approximately $200k and owns another block of land valued at about $30k. Is there any point in him appealing this decision or re-applying at a later date.
Hi Peter, good on you for trying to help your brother out! As your brother is a single homeowner, he is only allowed a total asset value of $634,750 before being ineligible for the Age Pension. Given the figures you provided equal $630,000 and there would be bank account(s), car(s) and personal contents values to add on, I believe Centrelink’s decision is correct so I would not recommend appealing the outcome. He can apply again in future though if the property should decline in value or as he spends his money living life. Presumably his total assets will fall under the threshold in the future and he can apply again then. In the interim you may wish to speak with him about applying for the Commonwealth Seniors Health Card as he would be eligible for this based on the information you have provided.
I have a 10.99 hectare property (no stock) 2 hectares are exempt from potential income earning so how does Centrelink treat the remaining 8.99 hectares? Also the land is valued at $520K is that divided into 2 for a married couple?
Hi Josie, thank you for seeking our guidance with your situation! There are a couple of rules that impact how Centrelink assess your property so to answer your query correctly we’d need to discuss it with you in more detail. You can learn more about our consultation service HERE and make a booking if you would like further assistance.
If owing to ongoing health concerns I am living with my daughter but my home has been empty for 3 years. What is the requirement for my ensign re this house.
Hi Lenore, I’m sorry to hear of your health issues and wish you well on your recovery! I’m not 100% certain what you mean by “the requirement for my ensign” but presume you are querying how Centrelink will assess it. If so then what I can say is that if you can show Centrelink that you will soon be returning to your house then they are able to consider you a homeowner and keep it exempt from the assets test however if you do not know when/if you will be returning then Centrelink will likely assess it as an investment property asset and add it’s private sale value to your existing assets. You should speak with Centrelink (ph 132 300) about your situation if this is the case so they can guide you on the best next steps.
Hi there,
I was wondering if you can give me some guidance – my dad is on a disability pension and my mum is on the age pension. Is it possible for them to sell their main residence and repurchase a new house without affecting their pension? (please note, house value would be roughly 1.8m). Thank you kindly for your help.
Hi Dee, thanks for reaching out. There are special exemption periods associated with house sale proceeds while repurchasing/building/renovating etc which allows pensioners a grace period before the proceeds impact the assets test. However, there are of course criteria’s to meet and every circumstances is slightly different. If you would like to discuss your parents particular circumstances, I would be happy to meet with you in our General Advice Consultation – which can be booked by clicking here. Thanks, Megan
How many days a week do you need to live in your home to keep the pension?
I stay with family a lot of days in the year
Hi Jaimie, thanks for the great question! There is no black and white answer to this one as there can be many legitimate reasons why you may spend time away from your primary residence so Centrelink will assess it on a case by case basis. Generally speaking you should be spending at least 6 months out of 12 living in your primary residence.
If we sold our home for say $1m and moved nearer our children in Melbourne and couldn’t afford the price down there by the beach, if we then bought a home for $ 1.5m and our daughter put in the $ 500,000 would that affect our pension?
Hi Merv, thanks for a great question as it is usually a case of giving money to your children for them to buy a house, not them giving it to you to buy one! Generally speaking the answer is no it will not impact your pension. The only thing to be mindful of is if your daughter’s money is a loan that you are paying back to her then you should declare this to Centrelink so they do not mistakenly believe you are gifting money to your daughter when they see payments leave your account for hers.
We are retirees and own our own house, which is worth about $1.3 To help out our son, we want to take out a mortgage on our property so that he can purchase a property and take on the mortgage himself. We would have nothing to do with money side if it. Maybe have our 3 names on the mortgage deeds.
He has a good deposit and can definitely afford to pay back the loan.
Would this affect our Centrelink Pension?
Hi Patricia, this is definitely something you should think about so well done raising the query! The house you live in is exempt from asset testing so taking a mortgage against it does not in and of itself impact your assets. However, the issue will be what you do with the money. Given the proceeds of the mortgage are going to your son Centrelink will likely assess the amount as a loan from you to him that he is to repay back to you. The impact of it being assessed as a loan from you to him is that it will become an assessable asset and the mortgage will not offset it in any way. Therefore there could be significant impact to your Age Pension depending on your current asset level plus this loan added on top.
renting my home and travelling in campervan how is aged pension assets calculated, is the home still exempt
Hi Jane, thanks for your question! You can do this and Centrelink will leave the exemption on your house in place for up to 12 months. If you are travelling for longer then that then your home may become an assessable asset. Any/All rental income earnt will need to be reported and will be assessable, the exemption only applies to the home as an asset.
I am 73, retired female on a full pension. I currently own my own home. As I have health issues I’m looking at selling my home and buying a property with my daughter. We are hoping to get either 2 houses or a house and a unit on one block. I will be using the money from the sale of my house to do this and she will get a mortgage. But we have been told by others that as she has the mortgage it will be classed as me gifting her the money. can you advise how we can do this so I still get my full pension. I am currently under the amount for asset test.
Hi Sue, to properly understand your situation and clarify how Centrelink would assess you it would be best to book a consultation HERE so we can understand your situation in full. Generally speaking though you would not be considered as gifting the money because in exchange for the money you gain the right to live in the unit/house for the rest of your life.
Hi, I own my own home and am receiving the aged pension. My daughter, son in law and granddaughter would like to move in with me while they are waiting to purchase their own home. They would be living with me rent free during this period. If they are residing with me will this affect my pension payments, and do I need to notify Centrelink?
Hi Dave, thankfully Centrelink allow family members to live with you with no impact, they only need to know if you start sharing with a flat mate or equivalent.
I moved to residential care two years ago, Centrelink want to list my old home as an asset. I still theoretically own %50, but the house is inhabited by my wife – we separated 8 years ago, but still lived together, (Centrelink know this). My ex has told me she doesn’t want to sell, and can’t pay me out. What can I do as I wont be able to afford the Residential Care payments if they stop my pension due to the asset limit.
Hi there, aged care payments are a little outside our wheelhouse so we could not say with certainty the best way forward. Please note though that Centrelink will only assess 50% of the property as your asset given you share ownership, not the full amount.
just on this.. so if my father owned 20% of a property and I own 80% does Centrelink only include his 20% of the property value not the full amount in the asset pool?
Hi Sammy, if the property in question is the house your father lives in then then entire value is exempt. If it is a second/investment property then you are correct, Centrelink only assess his portion of the value as an asset because if the property were to be sold, he’d only be entitled to 20% of the settlement.