November 11, 2019 
10 Comments 
Vikki has sold her home and plans to buy another. Is she still considered a homeowner?
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Q. Vikki
We have sold our home and are renting until we find a replacement. We realise that we have 12 months to purchase a home before the sale funds affect the assets test, but do the sale funds still have deeming applied? Are we still assessed as homeowners during this period or are we assessed as non-homeowners?
A. Firstly, only the value of principal home sale proceeds that are intended to be used to purchase, build, rebuild, repair or renovate a new principal home can be exempt under the assets test. If you are downsizing, the funds you intend to keep after the purchase of your new property will still be included in the assets test.
You will continue to be assessed as a homeowner during the period of time that proceeds from the sale of your home are exempt from the assets test, even though you are currently renting.
The proceeds from the sale of your principal home that are held in a financial investment are subject to deeming.
This will result in an increase in your total assessable income and, depending on your current level of income and assets, most likely reduce your fortnightly pension or payment. It could also change your pension or payment from being asset tested to income tested.
Case study
A pensioner couple sells their home for $900,000 and intends to buy another house for $850,000.
The couple decides to put the $900,000 in their bank account until they can find a home.
Under the income test, the $900,000 will be added to the couple’s other financial assets and deemed to earn income.
Under the assets test, only $50,000 will be counted as an asset as the couple intends to use $850,000 within 12 months to buy their new home.
The $850,000 will not be counted as an asset for pension purposes for 12 months or until they acquire their home, whichever happens first.
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When Deeming rates are applied for the year it takes to get into a new home will the couple be able to get rent assistance? $900’000 deeming is still a lot of income.
In your example of a house sale of $900,000 why is only $850000 exempt from the asset test please? Surely the whole proceeds are exempt for 12 months as the owners would not know the exact amount they would need to buy or build another home. They would not have to advise Centrelink if they were maybe unsure of the future cost.
You can add Stamp Duty, Solicitors Fee, Removal Costs to name just a few out of pocket expenses as well.
Chris B T – also add agents’ fees (there is a certain percentage involved). Thinking about moving some time soon and adding up the costs makes it easy to stay where we are. Maybe it is my age as well.
I agree Rosie, whole amount should be exempt until a new home is purchased and then you know exactly what is left over to be classed as an asset. I don’t understand why the author of this article has written it like this .
Rosie because they told CL they would spend $850K on a new house, not $900K
Rosie because they told CL they would spend $850K on a new house, not $900K
Just another bunch of crappy rules meant to minimise payment of Age Pension to help the BAD financial managers of the Budget in Canberra, while giving more employment to bureaucratic staff in Centrelink. As others have noted in comments above, these rules are full of holes, and hence are best scrapped altogether.
Let all have Universal Age Pension and anyone can do as they please with their own money or assets (upsize, downsize, blow it up), without worrying whether the Govt rules will penalise them or not.
My feelings exactly GeorgeM, just let them pay their taxes like anyone else.
In this example, the deeming on $900k would reduce each person’s AP by $166/ftn, so they would get $537.50 each per fortnight, assuming they were getting full pension prior to selling the house. If they get 2% return on their $900k, they earn $692/ftn, so they have more money coming in they had before they sold the house.