Subdivision plan comes unstuck

June subdivided her large house block and planned to sell the home and build a unit on the rest of the land. She wants to know how best to proceed after making an initial mistake.


Q. June: I am a widow who lives alone in a large house on a double block, and I recently subdivided the land with the plan to sell my house and build a small unit on the subdivided land. Centrelink has told me that my Age Pension will be reduced from $815 per fortnight to $372 per fortnight because I now have an asset of $150,000 in the new block. I wrongly thought that there would be no penalties for 12 months while I downsized my house. What can I do?

A: Under Centrelink rules, the 12-month exemption applies only if you sell your home and are actively looking for a new one. And even then, it applies only to the amount you plan to spend on your new home. The aim is to allow you a reasonable amount of time to choose a suitable home.

All the proceeds from the sale that are held as financial assets are deemed to be earning income and may affect the Age Pension. To view the current income limits, visit

You should seek independent financial advice on how best you can structure your finances to ensure you maximise your Age Pension payment.

New downsizing legislation takes effect from 1 July. In this YourLifeChoices article, we consider the definition of downsizing, review the various rules attached to the strategy and analyse the potential rewards and implications for your retirement income, including for the Age Pension.

If you have a Centrelink question, please send it to and we’ll do our best to answer it for you. 

Related articles:
How downsizing affects the pension
Downsizing: the good, bad and ugly
Downsizing and the Age Pension

Financial disclaimer: All content on YourLifeChoices website is of a general nature and has been prepared without taking into account your objectives, financial situation or needs. It has been prepared with due care but no guarantees are provided for ongoing accuracy or relevance. Before making a decision based on this information, you should consider its appropriateness in regard to your own circumstances. You should seek professional advice from a Centrelink Financial Information Services officer, financial planner, lawyer or tax agent in relation to any aspects that affect your financial and legal circumstances.


Written by Janelle Ward

Energetic and skilled editor and writer with expert knowledge of retirement, retirement income, superannuation and retirement planning.

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