What if the kids pay the mortgage?

Rene is about to retire, still owes money to the bank and wants to know what happens if his kids pay off his debt.

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Q. Rene
My wife and I are about to retire in four months. We are still paying off our house. How can our children continue repaying the remaining mortgage without transferring ownership of the house to any of our three children, so that we can still be eligible for the Age Pension?

A. No one-off gift will be assessed by Centrelink as income, regardless of the amount but it must be reasonably predicted that it will not be repeated.

However, if your children continue to pay off the mortgage in regular instalments, then in all likelihood this would not be considered a gift and as such would be subject to the income test.

So, if possible, the children can pay off the remainder of the mortgage in one lump sum and it will not affect your pension payments as it will be treated as a one-off gift.

Any gift given must be declared to Centrelink by the person in receipt and by the person gifting, if they are also in receipt of a benefit payment. Both members of a couple can receive a monetary gift, but it will need to be declared.

Whilst being able to gift a sum of money may be a very kind thing to do, the person receiving, if they are on an Age Pension or other assessable payment, needs to be very clear that what they do with the money may affect their payment. As you are planning to use the money to pay off your mortgage you will be fine.

If you’re unsure about how such a gift will affect your Age Pension, you should discuss your individual circumstances with Human Services by calling 13 2300. You can find out more at HumanServices.gov.au.

Do you have a question regarding the Age Pension or other Centrelink benefits?

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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 Ben

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