A reader is planning to retire on a sizeable house block. How will this affect his entitlements for the Age Pension?
•••
Q. Clive
My wife and I plan to sell our principal home and buy another. We have spotted a house on 2.2 hectares. This is 0.2 hectares over Centrelink allowance.
With the extra 0.2 hectares, how is it valued? I understand the amount over two hectares will be classed as an asset.
As well, I have heard that some properties over two hectares can be reduced in hectare size if some of the land is rocky or unproductive, etc. If this is the case, how do you get this done?
A. Yes Clive, you are right, that 0.2 hectares (that’s about half an acre in the old scale) is classified as an ‘asset’ under the Age Pension rules, which is bad luck.
Unfortunately there are some very strict rules for exemptions and you must meet all of the rules, not just some.
The one that’s going trip Clive up is that he or his partner must have lived on the property for 20 years or more.
The other three rules are:
- have reached Age Pension age
- are getting Age Pension, Carer Payment or Pension Bonus Bereavement Payment from Centrelink or a service pension from the Department of Veterans’ Affairs
- pass the land use test
Centrelink uses current market value to assess properties which is different from how councils and state governments value real estate.
Councils often include other taxes in rate notices including fire and ambulance services and water supply payments. This is why your council valuation will be different from your Centrelink valuation.
If you have a mortgage, under the assets test, Centrelink will only include the amount you own. If Clive still has a mortgage after buying his new property Centrelink will take away the loan amount you owe for the property from your share of the total value.
Centrelink values urban properties every year and vacant land, bush blocks, farms and hobby farms every two years.
Centrelink uses third-party valuers to provide indexed real estate market data by postcode.
If you disagree with the valuation, you can contact Centrelink which may provide an on-site, third-party valuation. This service is free.
Do you live on a larger block? Have you had it assessed for Centrelink purposes? Why not share your experience in the comments section below?
Also read: Can I replace my work with a part pension?