Sanchez’s mother is selling an investment property and is worried about her pension.
My mum receives the Age pension, around $850 per fortnight or $22k annually. She also works two shifts per fortnight as a nursing assistant and earnt around $11k last financial year. She has been within the Age Pension thresholds to date and hence qualifies and has qualified for several years.
This past tax year she had a capital gain tax event when she sold an investment property that she owned 20 per cent of. The end result was a $20k capital gain. Her tax return will show a $53k annual income and now we are wondering if this will cause her any issues with her Age Pension?
It was a one-off event, so her income for FY2021 will no doubt be back to just the Age Pension as she has decided the retire within the next few months. Any guidance on her position would be great.
A. The money from the sale of the investment property is not included in the income test but, if it is worth more upon the sale of the property than it was adjudged to have been worth, it could change her assessment under the assets test as she will now hold more money in assets.
While the income from the sale of the investment property is not included in the income test, what your mother does with that money could still have an impact on the income test.
If she puts the money into a deposit account, it will be deemed to be earning a certain amount of interest. This income is then assessed as part of the income test and will ultimately determine whether or not your mother continues to receive an Age Pension.
If the deemed income from the amount your mother has invested is higher than the income she was receiving in rent from the property, there may be some effect on the pension that she receives.
It could be beneficial to discuss the situation with a Centrelink Financial Information Services officer who will be able to provide you with more information about this situation and how it will affect your mother.
If you enjoy our content, don’t keep it to yourself. Share our free eNews with your friends and encourage them to sign up.