Is home sale a possible minefield?

Marina is seeking information about the ramifications of her mother-in-law selling her home and sharing the proceeds among her siblings. She asks Noel Whittaker for guidance.


Q. Marina
My mother-in-law is in aged care and nearly 90. She has decided to sell the family home she lived in for more than 30 years and wants to keep a sum of money for her upkeep and distribute the rest to her three siblings while she is alive.

First, is there any barrier to this? The siblings are married and all are retired and receive some sort of Age Pension. Will all, including the mother-in-law, have to pay taxes individually on the sale, which could be around $1.6 million? We understand the Age Pensions may stop but we would like to know the best way to address in order to minimise disadvantage.

The grown-up children of the marriages are looking for a benefit when things are settled and this information may assist in decisions. Any information or recommendations would be helpful.


A. My book co-author and aged care guru Rachel Lane explains: You can gift as much as you want, just be aware of the consequences. If the home is retained, the maximum asset value they will ascribe to it is $166,707. If it is sold, the full $1.6 million (if that is the sale price) will be assessed as an asset and if that money is placed in financial investments, it will also be deemed to earn income.

This change in assessment can see the Means Tested Care Fee increase from a few dollars a day to in excess of $200 a day, which she can pay until she reaches the annual cap of $27,232 with a lifetime limit of $65,358.

If your mother-in-law receives a pension, the former home will be exempt as an asset for two years from the date she entered care. If the home is sold, she will be treated as a non-homeowner, with a higher asset threshold; but given the amount she will receive, her pension will be lost.

From a tax point of view, there is no capital gains tax on the principal home and we don’t have gifting taxes. As far as the beneficiaries of these gifts go, the money they receive will become their asset and, if held in financial investments, deemed to earn income.

Before you go down this road, I strongly suggest you seek advice. If someone is doing this under an EPOA (enduring power of attorney) they need to think carefully

Do you have a question you’d like Noel to tackle? Email us at [email protected]

Noel Whittaker is the author of Making Money Made Simple and numerous other books on personal finance. His advice is general in nature, and readers should seek their own professional advice before making any financial decisions.

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Noel Whittaker
Noel Whittaker
International bestselling author, finance and investment expert, radio broadcaster, newspaper columnist and public speaker, Noel Whittaker is one of the world’s foremost authorities on personal finance. He is currently an Adjunct Professor and Executive-in-Residence with the Queensland University of Technology, as well as a committee member advising the Australian Securities and Investment Commission.
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