December 28, 2020 
8 Comments 
Andrew is planning to sell his home but is worried the proceeds will stop his pension.
Q. Andrew
My wife and I wish to sell our house and move interstate in the new year. We are both on the pension and plan to sell our home and move interstate to rent while we look to buy a home. If we were to put the proceeds of our current home sale in the bank until we buy, would that impact on us getting the full pension we are receiving now? If it will affect our pension payments, is there a solution to overcome this situation?
A. It will really depend on your current financial situation.
When you sell your principal residence, the proceeds from the sale that exceed the amount you intend to spend on your next home are assessed as an asset immediately.
If you are planning to spend roughly the same amount of money on a new house as what you sold your old house for, then the situation is different.
The amount of the sale price that you intend to use to purchase a new residence can be an exempt asset for a period of up to 12 months. This is to give you time to choose a suitable home.
Should something prevent you from doing so within the time frame, you can apply to Centrelink to have this period extended by up to a further 12 months.
However, all the proceeds from the sale of your home that are held as financial assets (in your case putting the money into the bank) are deemed to be earning income.
Any deemed income will be assessed under the income test, which may affect your Age Pension payment.
Deeming rates are at record low levels with the first $88,000 of your financial assets being deemed to earn 0.25 per cent and the balance of funds over that amount being deemed to earn 2.25 per cent. So, whether this affects your pension payment will depend on how much money you receive from the sale of your house, plus the total of your other income.
Any amount left over after you buy your new home is considered an asset and will be assessed as such.
Have you sold a house while receiving the Age Pension? How did it affect your payments?
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Re. “”deemed to earn 2.25 per cent”” Where do you get 2.25 per cent Safely ??
the only place you would get that interest is in the mind of some centrelink pen pusher.
Don’t blame the workers, blame the L.N.P. Government, they set the rates.
Interesting. Sold home just before last Christmas – and you know what’s happened since then? fires, Covid, fewer houses on the market – oh and a terminally ill cancer patient in the same house which means did not venture forth for months…. But this article was the first one that indicated that we could appeal the cancellation of pension (occurs due to sale proceeds and superannuation nestegg (asset)… It also meant cancellation of Health Care Card… and no mention of any alternatives etc
Didn’t mention that they may have been able to put in to Super (Downsizer Rules) buy shares, managed fund etc etc. Eligible for Rent Assistance in the mean time. etc
Deeming rates are a disgrace. 2.25% is absolutely unachieveable for most.
Majority of Pension customers are not impacted by Deeming rates these days, asset test is impacting more. Could buy shares or manged investment, not just stick it in a bank account.
Beware. We recently sold our home with the intention of downsizing and leaving us some money in the bank for an improved lifestyle. Due to the recent rise in house prices in our area, and the influx of out of state buyers depleting the stock of houses, finding a cheaper replacement home became near impossible. We purchased the only house available which was in need of maintenance to weather proof it, and rented so we are unable to move in for another 8 months. The required maintenance, rental insurance etc is gobbling up all the income from the rent. Consequently, we are living in our caravan, in a caravan park. Centrelink has changed our status to non homeowners as we do not have permanent tenure, BUT our rented house and the remainder of the money in the bank are now considered assets and our pension has been reduced to $16 a fortnight each, plus supplements and rent assistance and we are also deemed on our assets. We are now forced to live on our capital as frugally as possible until the tenant moves out. In summary, we have gone from a comfortable home in a good area with a full pension to living in a caravan with assets, including a shabby house in a lesser area, and no income.