Ron is looking at purchasing a big property but thinks it might make him ineligible for the Age Pension when it comes time to apply.
I have been looking for a special style of house on a small acreage. It is hard to work within the five-acre limit and this lessens my chances of getting the exact combination I am looking for.
Currently, I am looking at a rural property of 15 acres and the house is exactly what I am after. How do I work out the asset value on the 10 remaining acres? I do not currently receive an Age Pension, but I don’t work. I am retired and I can’t buy the house and land without having this important detail otherwise, when I do apply for the pension, I will lose a lot of my pension if I do not have the correct answers.
My only income is an allocated pension and I will be using a lot of its value to pay for the house. My only income would be the Age Pension (if I am eligible). I do not think that I am eligible to be granted the whole 15 acres as my permanent place of residence.
I am told that I can use the unimproved land value, which is on the rates notices, but surely it cannot be as simple as that.
A. You are correct that you will not be able to claim the entire 15 acres as your permanent place of residence.
There are exceptions to the rule regarding land in excess of two hectares (five acres), but one of the key considerations is that you have lived on the property for 20 years or more, which isn’t the case in this situation.
The remaining 10 acres of the property will be counted as an asset by Services Australia.
Services Australia uses current market value to assess your real estate, which can actually be as simple as looking at the land value, although if there is a big differential between what you paid for the property and the land value, it will be based on what you paid for the property.
Services Australia indexes the value of residential properties each year to keep them up to date. If they can’t index a property’s value, they will arrange a valuation when needed.
Have you ever had the value of your property assessed for the purposes of the Age Pension assets test? Was it a simple process?
If you enjoy our content, don’t keep it to yourself. Share our free eNews with your friends and encourage them to sign up.