Beware these pension pitfalls before deciding to downsize

David is considering downsizing but is worried about his pension payments.

David is considering downsizing but is worried about what will happen with his pension payments.


Q. David
I am trying to sell my house at Cootamundra to downsize. The house was valued at $290,000 in January last year. However, selling in Cootamundra is difficult. I have received an offer of $270,000 as the property needs maintenance.  

I am considering buying a pre-loved manufactured home at Bonnels Bay, NSW. I would need to pay out a mortgage with CBA of approximately $35,000. After all the transactions, I estimate I would have $90,000 cash assets left. Would this be an issue with Centrelink?

A. To help you make the most informed decision, you should seek advice from an independent financial planner. But if you’re seeking an overview of how Centrelink will assess the proceeds from the sale of your home, here is what you need to know.

When you sell your principal residence, the proceeds from the sale that exceed the amount that you intend to spend on a smaller home are assessed immediately. The amount you intend to use to purchase a new residence can be an exempt asset for a period of 12 months. This is to give you time to choose a suitable home. Should something prevent you being able to do so within the time frame, you can apply to the Department of Human Services to have this period extended by up to 12 months.

All the proceeds from the sale that are held as financial assets are deemed to be earning income.  

Any deemed income will be assessed under the income test, which may affect your Age Pension payment. Your Age Pension payment is reduced by 50 cents for every dollar that exceeds the income test threshold.

Any amount left over after you buy your new home is considered an asset and will be assessed as such. Your Age Pension payment is reduced by $3 for every $1000 that exceeds the assets test threshold.

When the income and assets test are both applied, your Age Pension payment is the lower amount of the two. So, it is important to understand from the outset that while downsizing a home for a smaller, less expensive property may free up your capital, it could also result in a loss of, or reduction in, your Age Pension income.

If you have a Centrelink question, please send it to and we’ll do our best to answer it for you.

Are you eligible for an Age Pension? Do you know your rights? The RetirePlanner™ tool has all the information you need.


    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.


    To make a comment, please register or login
    22nd Feb 2019
    What really irks is that senior politicians retire on about $300K p.a. pension. What an extreme and opposite polarization that is
    22nd Feb 2019
    What really pisses people off is that;-
    1. They don't deserve such a high pension which is 13 times higher than normal annual full pension
    2. They vote in divisions against increases of the normal people's aged pension
    3. On retirement from parliament they can get a private job income and still get such a high pension without Deeming Income and Assets test penalties.
    4. They wont be subjected to Robo-Debt scrutiny.
    22nd Feb 2019
    What a load of crap and bull shit. How come the politicians get very good pensions which are never touched by any coming government but they want to meddle with our pensions making new rules and regulations all the time for the rest of the country.
    22nd Feb 2019
    I agree with the others, very unfair that pollies get such big pensions, they should be asset tested like everyone else, then they want to take money from pensioners because they sell their house or get a little extra, no hope of enjoying it. And then they keep changing pollies so they all get this high pension, what a rort. Universal pension for all including politicians.
    1st Mar 2019
    I agree with you, musicveg, except the universal pension for all including pollies. Pollies should be given something extra for being away from home so much (to sit in Parliament).

    But the pollies get absolutely ridiculously huge pensions & multiple travel perks (flying business class, of course). It is wrong wrong wrong & should be curbed right down to something reasonable, & no travel perks. How on earth can they justify overseas travel as part of any pension?

    And don't forget, they also have Superannuation on top of this pension. It is a filthy rort.
    1st Mar 2019
    the pollies do it cos they can !!
    It is time for a revolution
    Or is the Seniors United Party worth a vote instead ??

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