A reader wants to know how Centrelink will assess the land he lives on. He doesn’t make any income from the land or plan to, but that’s not the only condition Centrelink has about the amount of land pensioners own.
My wife and I live on 2.7 hectares and have been here for three years.
We are both 56 years old and were wondering what we could do to ensure that the land over two hectares (0.4 hectares) would not be counted as an asset once we get to retirement age.
It is a lifestyle block and we can’t imagine ever making money from it.
A. Unfortunately for Bruce, Centrelink has some strict rules about land ownership.
Centrelink uses two tests to determine any payments, the assets test and the income test.
The assets test values your assets and the income test your income from a variety of sources including savings and investments.
The assets test includes items such as vehicles, furniture, collections, such as an art collection, and most pertinent for this reply, land.
Normally, only two hectares of land on the same title as your main home are exempt from the assets test.
There are some exemptions, but they will not cover Bruce’s situation.
Bruce and his wife must meet all the exemption criteria. They are:
- they have reached Age Pension age
- they are getting Age Pension, Carer Payment or Pension Bonus Bereavement Payment or a service pension from the Department of Veterans’ Affairs
- they have lived there for the past 20 years in a row
- and pass the land-use test.
Unfortunately, just considering how long Bruce and his wife have lived on the property alone, they will not meet the exemption criteria and when Bruce does in 17 years he will be well over Age Pension age.
Centrelink will make exceptions for the land-use test if the land, as Bruce suggests, is not really suitable for making an income.
However, as he does not meet any of the other criteria, even the small area of land he owns over the exempt two hectares will be assessed as an asset.
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.
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 onsite, third-party valuation. This service is free.
You can also hire a private land valuer to provide a report if you wish to contest a valuation.
The only saving grace for Bruce is that such a small, unproductive area of land is likely not to be of much value.
Have you had your land assessed by Centrelink? Were you happy with the valuation? Why not share your experience in the comments section below?