How upsizing affects the pension

John wants to sell his home of 48 years and move to a larger property. How will it affect his pension application?


Q. John
My wife and I are applying for the Age Pension. We want to sell our current home of 48 years and move to a larger property of 21.5 hectares. How much pension will we lose if we go ahead with this decision.

A. How much your land purchase will affect your pension depends on the value of the land you are purchasing.

Normally, only two hectares of land on the same title as your main home are exempt from the assets test, although all the land on the title may be exempt if you or your partner:

  • have reached age pension age
  • are getting an Age Pension, Carer Payment or Pension Bonus Bereavement Payment from Centrelink, or a service pension from the Department of Veterans’ Affairs
  • have lived there for the past 20 years in a row
  • pass the land use test.

To meet the extended land-use test, you need to be using the land to make an income, if possible. This could mean:

  • you or a family member are running a farming business on the land
  • you are leasing the land to someone else for a commercial rate of return
  • have little or no scope to earn income from the land.

As you are looking to purchase the property now and haven’t lived on the property for 20 years, it will most likely mean that you will not gain an exemption for the extra land outside of the two hectares afforded by the regulations.

This means that 19.5 hectares of the land will be included in the asset test. If this land takes you and your wife’s combined assets over $853,000, you will not be eligible to receive an Age Pension. You can view the full asset test limits here.

Written by Ben


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