DSP – how will property affect your payment?

Lily isn’t sure what moving home will mean for her pension or tax liability.

Woman at table with head in hands beside coin jar with pension

Due to a disability, Lily may have to move from her home to the investment property that she owns, but isn’t sure what this will mean for her pension or tax liability.

Q. Lily

I am living with multiple sclerosis and had to give up work. I have applied to Centrelink for the Disability Support Pension (DSP). We live in our own house, but it has stairs and at some point we might have to consider moving to a low-set or one-level house. We have an investment property which is low-set and rather than buying another house, we may move to this when the time is right. What we would like to know is how this might affect us in regards to our Centrelink payment or Australian Tax Office obligations, since it is an investment house. Modifications to the property will also be needed, so that it suits my needs.

My hubby may have to give up work to become my carer either full or part time, only time will tell. There is a lot of uncertainty in the air with regards to how my illness will progress and what my/our needs will be, as my hubby is not getting any younger either.

A. As you have already applied for a DSP, you should be aware that any investment property will be assessed as an asset. Also, any income derived from rent will be assessed under the income test. 

When, and if, a move is made to the second property, the initial property (if not sold) will be assessed as an asset and, again, income derived from rent will be assessed under the income test. If this house is sold, then any profit may be exempt from the Capital Gains Tax as it may be classed as a main place of residence. However, how you choose to invest that profit will again affect how it is assessed.

Life is indeed uncertain and you are facing a few challenges along the way. It would be beneficial for you and your husband to discuss your options with an independent financial planner or accountant, who can advise on different income and investment scenarios that will suit your individual and changing needs.

You can also make an appointment to discuss your individual circumstances with the Department of Human Services by calling 13 23 00.



    To make a comment, please register or login
    4th Apr 2016
    You will have to sell your investment property and then any interest earnt on the money from the profit will be classed as income. 50c from every dollar assessed as income will be deducted from your DSP.
    4th Apr 2016
    thats if she can get the DSP, certainly in this day and age, they try to keep you off it, if they can!!
    4th Apr 2016
    Coss the Government can certainly make headaches for you.
    4th Apr 2016
    Hockey labelled disabled people rorters yet he himself was rotting several multiples of $288 a night travelling allowance to pay of his Canberra holiday house. And Bronwyn Bishop rorted hundreds of thousands on herself
    So less money for the disabled
    4th Apr 2016
    Politicians and public servants are entitled to an allowance when they travel. Whether we like it or not they were not acting illegally. It was within the terms of travel allowance.
    4th Apr 2016
    Whilst I have some sympathy for Lily, she is hardly in the 'needy' category and should NOT be entitled to claim a disability pension.

    The fact is, she owns her own home AND has an investment property. On top of that both she and her husband are working (or have worked) and so must also have some level of superannuation. The investment property is being seen as a viable alternative to her current home as her condition worsens.

    So just exactly where is her hardship? Sell the property she currently calls her home, realise the cash, use some to 'fix-up' the investment property to accommodate her needs and invest the rest to provide an income. Why should DSP be an option in these circumstances when there are clearly assets to be realised to support themselves?
    6th Apr 2016
    Sell the investment property and modify your current home to suit your needs. The stair lift would be one way to go.

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