Will downsizing be a blessing in disguise for Graham?
Graham is considering downsizing, but before he makes any decisions he would like to know how much of the money he makes from selling his house will be exempt under the asset-free period?
Can you help me with this query regarding Centrelink’s rules? I believe that if I sell my house the money is asset test free for up to 12 months while finding and purchasing another house. If I sold my house and moved into a smaller one, is any leftover money set aside for upgrades to the newly purchased house exempt from the assets test?
A. Provided by Centrelink
Funds resulting from the sale of a pensioner's residence are exempt from the assets test for 12 months after the sale (and in certain circumstances up to 24 months). Note that the funds from the sale are subject to the income test during that period. However, the exemption ends as soon as you move into the house, as the new residence is deemed liveable. Making renovations and improvements for lifestyle reasons would not extend the exemption period.
Centrelink is able to extend the exemption for up to a total of 24 months if the person has experienced delays beyond their control in obtaining a new principal home (e.g. as often occurs when building a new home).
Also note that only the amount that the owner intends to spend on the purchase of the new home is exempt from the assets test.
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