A reader would like to know how Centrelink assesses the value of real estate, and if that value ever goes down if the real estate market also falls.
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Q. Rob
I am writing to bring to your attention how Centrelink increases the value of real estate holdings annually.
By doing this my assets go up and the pension goes down by $3 per $1000 but the rental income cannot go up, so I am worse off.
One month after the Consumer Price Index increase, Centrelink claws back the money by increasing my asset level.
I don’t know how this can be addressed but you can bet your life if the real estate values drop next year Centrelink won’t reduce my value and increase my pension.
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A. We asked a Department of Social Services representative for advice about your situation and this is their answer:
“The assets test is designed so people with substantial assets use those assets, either directly or to produce income, to meet their day-to-day living expenses before calling on the social security system for support.
For social security purposes, the value of an assessable asset is its net market value.
The net market value is the amount the owner could expect to receive if the asset was sold on the open market, less any allowable charges or encumbrances (such as a mortgage).
Once a person’s real estate value has been determined, its value is adjusted annually to reflect changes in the property market. This ensures that the person continues to receive the correct entitlement based on the value of their assessable assets.
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In the event property values decline, this will be reflected in the new value applied to the asset and the individual’s pension will be adjusted accordingly.”
So there you have it Rob, we hope this helps.
If you want to disagree with the valuation of your real estate assets, you can have the valuation reviewed and should contact Services Australia (Centrelink) to arrange this.
Centrelink may arrange a formal onsite inspection and assessment of the real estate by a licensed valuer.
People with real estate assets may also be able to access the equity in those assets through the Home Equity Access Scheme. The scheme is available to all senior Australians of Age Pension age who meet certain residency requirements and own suitable real estate in Australia to use as security.
Has the value of your assets affected your Age Pension payments? Did your payments go up or down?Why not share your experience in the comments section below?
When valuing your home contents assets, don’t count them as the amount paid for them or what they would cost to replace today.
Count them as the amount you would get it you put them on Gumtree or Marketplace!
I am having a hard time giving some of my stuff away or asking $5 or $10 for them, so they are worth nothing as far as Centrelink valuations go!
It will not be long before canberra starts making noises about increasing the deeming rates, due to the monthly increases we have been seeing lately. I suppose then that would be seen as unfair.