Will selling a share in the family home lead to a cut in the pension?

Q. Madeleine
I have a question on behalf of a friend who I am concerned may make a decision that will affect her eligibility for a full pension. I have advised her to make an appointment with Centrelink but wondered if you could offer advice?

This friend owns her house with no loan on it but has very little superannuation. She wants to sell half the house to her daughter to help fund her retirement as she is coming up to pension age. She will determine the sale price by the true valuation of the property. The daughter will obtain a housing loan to pay for her share in the property and my friend will put that money into her superannuation.

My question is: Would my friend still be classified as a homeowner if she only owns half of the house and is her allowable asset amount still $270,500 before the pension starts reducing?

Read: Delaying applying for the pension could be a costly mistake

A. First of all, you can be regarded as a homeowner if you own, or are paying off your home or have a right or interest in your home and that right or interest gives you reasonable security of tenure. Your friend still has a right of interest in the home so it appears that your friend will still be classified as a homeowner.

Your friend needs to be aware that shared housing can still affect your payment. This will depend on your relationship with the other owner and how you are contributing to household costs. The allowable asset amount will remain at $270,500.

Read: Rising inflation biggest threat to retirement income

If your friend has owned her home for more than 10 years and she sells part (or all of it) she may be able to contribute up to $300,000 in downsizer contributions from the sale to her super. w

The scheme used to be eligible to those aged 65 or older, but the changes announced in the Federal Budget mean it will be eligible to those aged 60 or older as of 1 July 2022.

There is more information on downsizer contributions here and here.

I would recommend your friend to speak to a financial planner or contact the Centrelink Financial Information Service for more information.

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Jan Fisher
Jan Fisherhttp://www.yourlifechoices.com.au/author/JanFisher
Accomplished journalist, feature writer and sub-editor with impressive knowledge of the retirement landscape, including retirement income, issues that affect Australians planning and living in retirement, and answering YLC members' Age Pension and Centrelink questions. She has also developed a passion for travel and lifestyle writing and is fast becoming a supermarket savings 'guru'.
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