How does Services Australia value excess land?

Ron is purchasing a big property but thinks it might make him ineligible for the pension.

How does Services Australia value excess land?

Ron is looking at purchasing a big property but thinks it might make him ineligible for the Age Pension when it comes time to apply.

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Q. Ron
I have been looking for a special style of house on a small acreage. It is hard to work within the five-acre limit and this lessens my chances of getting the exact combination I am looking for.

Currently, I am looking at a rural property of 15 acres and the house is exactly what I am after. How do I work out the asset value on the 10 remaining acres? I do not currently receive an Age Pension, but I don't work. I am retired and I can't buy the house and land without having this important detail otherwise, when I do apply for the pension, I will lose a lot of my pension if I do not have the correct answers.

My only income is an allocated pension and I will be using a lot of its value to pay for the house. My only income would be the Age Pension (if I am eligible). I do not think that I am eligible to be granted the whole 15 acres as my permanent place of residence.

I am told that I can use the unimproved land value, which is on the rates notices, but surely it cannot be as simple as that.

A. You are correct that you will not be able to claim the entire 15 acres as your permanent place of residence.

There are exceptions to the rule regarding land in excess of two hectares (five acres), but one of the key considerations is that you have lived on the property for 20 years or more, which isn’t the case in this situation.

The remaining 10 acres of the property will be counted as an asset by Services Australia.

Services Australia uses current market value to assess your real estate, which can actually be as simple as looking at the land value, although if there is a big differential between what you paid for the property and the land value, it will be based on what you paid for the property.

Services Australia indexes the value of residential properties each year to keep them up to date. If they can’t index a property’s value, they will arrange a valuation when needed.

Have you ever had the value of your property assessed for the purposes of the Age Pension assets test? Was it a simple process?

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    Disclaimer: All content on YourLifeChoices website is of a general nature and has been prepared without taking into account your objectives, financial situation or needs. It has been prepared with due care but no guarantees are provided for ongoing accuracy or relevance. Before making a decision based on this information, you should consider its appropriateness in regard to your own circumstances. You should seek professional advice from a Centrelink Financial Information Services officer, financial planner, lawyer or tax agent in relation to any aspects that affect your financial and legal circumstances.





    COMMENTS

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    adbob
    31st Aug 2020
    10:36am
    I don't think that really answers the question.

    There is often more demand for 5 acre rural living blocks that for eg a 50 acre farm which was once financially viable but is no longer.

    So if you own such a 50 acre farm it would be advantageous if Centrelink valued the excess 45 acres as the difference between what the whole place is worth and what the house plus 5 acres would be worth on it's own. Sometimes that might be small or even negative.

    OTOH if they say the house (ie bricks and mortar) is worth X - land worth Y and pro rate the land by area the outcome will be very different.
    Eddy
    31st Aug 2020
    4:16pm
    adbob, if one has lived continuously on the property for over 20 years n Centrelink do not regard the excess acreage as an asset, However in Ron's case this 20 year rule does not apply. The secret is to buy the property 20 years before age pension eligibility. If the property is producing an income (ie cropping, raising livestock, agistment etc) then that income is included in the income test.
    AutumnOz
    31st Aug 2020
    11:34am
    Another thing to consider is the way Centrelink values items as it is different for single people and married couples.
    You also need to consult the local Council and see if it is possible to sell off some of the excess land around the 5 acres you want to keep.
    Good luck with Centrelink.
    Janus
    31st Aug 2020
    11:42am
    It is not just the area, but the quality or potential productiveness of the land that is taken into account. Is the land able to be subdivided, or is it high grade agricultural land? Or as in my case, is it steep hilly scrub with hardly any soil and a few sparse trees, almost impossible to subdivide. Our 13 acres was valued at nil for pension purposes.

    Note that it is full of rare plants, native bush, with a splendid view, but that is not what Centrelink considers "value". Can I run stock on it? No, a goat would starve to death. We had to import a load of soil so we could grow a few veg. We love it.
    Skiing
    31st Aug 2020
    12:26pm
    Starting point is look at the site value on council rates notice. Easy to calculate the “excess” 10 acres. You then put your estimate on the 10 acres if you think it should be less based on things like...can’t subdivide, catchment area, rocky ground, etc. If the value becomes an issue, appeal against any Centrelink valuation imposed.


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