Home purchase and the pension

Gloudina wants to buy half of her daughter’s house but is worried that it will affect her pension.

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Q. Gloudina
I have recently sold my house and wanted to buy half of my daughter’s house. She has never lived in it (it has always been rented out and I have also rented it for last 12 months). Is buying into her house going to affect my pension? The amount of money I have left after purchasing half of my daughter’s property would not exceed the allowable amount in the assets test.

A. If the half of the property you are purchasing is to continue to be your primary place of residence it will be exempt from the assets test, and the fact that ownership is shared should have minimal impact on your pension.

When you sell your principal residence, the proceeds from the sale that exceed the amount that you intend to spend on a smaller home are assessed immediately. The amount you intend to use to purchase a new residence can be an exempt asset for a period of 12 months. 

Any amount you have left over from the sale of your former property and the purchase of this property will be assessed, but if you keep it as an investment, it would be assessed under the income and assets test, which could affect your pension payments.

As you have already sold your property, if you had kept the money from the sale in the bank, you might also notice an increase in your pension payments once your assessable assets have been reduced.

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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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