Q. My husband and I are thinking of renting out our home so we can travel in our caravan for 12 months. Both of us are on the Age Pension. We think we could earn $450 a week in rental income. How would this affect us? We have no investments and only a very small amount of superannuation left.
A. First of all, a few financial advisers have been telling pensioners there is a ‘grey nomad’ rule regarding travelling but, according to Services Australia, this is not true, though there are a few rules that cover you being absent from your primary residence for whatever reason.
If you already receive a pension, you would know it is subject to two tests: the assets test values all your assets – excluding your home – and the income test values all your income, including rent.
While your home is excluded from the assets test, if you are absent from the principal home for longer than 12 months, it will be assessed as an asset and it will affect your pension payments.
And according to Services Australia, any rental income generated from your principal residence while you are travelling is regarded as assessable income under the income test and you will need to inform Centrelink of any money you receive.
To avoid having Centrelink reassess your home as an asset, you need to return within 12 months of teh start of your travel and resume living in your residence.
The Department of Social Services is a bit vague as to what time length you must stay in the house once you return to keep it qualifying as your primary residence.
A departmental spokesman said there is no set length of time a recipient must reside in the principal home before a new 12-month exemption can commence.
“However, where the person returns to the home, and subsequently leaves again, Services Australia must be satisfied that the customer has, in fact, resumed residence in their principal home, and has not returned simply to restart the exemption period,” the spokesman said.
Apart from the Centrelink requirements, while it should be theoretically easy to rent out your property in the current overheated rental market, there may be few people who want to rent for less than 12 months at a time.
For further information, please contact a Centrelink financial information service officer.
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