18th Mar 2019
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Centrelink Q&A: Renting out your usual primary residence
Author: Ben Hocking
Centrelink Q&A: Renting out your usual primary residence

Susan and her husband want to rent their house out for a few years but are concerned about the implications for the Age Pension.

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Q. Susan
My husband and I are both going to retire in January 2020. He will be 67 and I will be 66 – we will both be able to obtain the age pension. We own our own home and will have approximately $200,000 between us in superannuation.

We are thinking of moving interstate for a couple of years to assist with grandchildren. We don't want to sell our house, so we will rent it out and rent a property ourselves. As we will be renting our house out, will that then become a reportable asset – even though we will be renting ourselves?

A. Once the house you live in ceases to be the principal home that you live in, you will have to report it as an asset to Centrelink. Further to this, the money that you make from renting out this property will be assessed under the income test. You will be able to deduct expenses such as rates, taxes and maintenance from your rental income when you are working out the total income you receive from this investment.

Before considering a move, it would be worthwhile to discuss your situation with a Centrelink Financial Services officer. You can make an appointment by calling 13 23 00.

Are you eligible for an Age Pension? Do you know your rights? The PensionChecker™ tool has all the information you need.

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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.





    COMMENTS

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    McDaddy
    18th Mar 2019
    10:24am
    You are able to vacate your Primary Residence temporarily for up to 12 months before it becomes an asset, you can also rent it out during this time. You will remain on the Homeowners asset test and home will be exempt, after 12 months the value is added to the asset test, but you move onto the non homeowners asset test, which is higher.
    Cowboy Jim
    18th Mar 2019
    10:41am
    So much for the popular belief that your own home is exempt from the asset test, eh? Difference is about $200'000+ between owner and renter. As a home owner you are only ahead if your place is worth quite a bit of money. Unfortunately mine isn't.
    greenie
    18th Mar 2019
    10:54am
    You will also be liable for capital gains tax when you sell the house. This will be calculated with reference to the period of ownership and the period of rental earnings.
    Farside
    18th Mar 2019
    11:34am
    There is a general exemption if rented out for less than six years

    https://www.ato.gov.au/general/capital-gains-tax/your-home-and-other-real-estate/your-main-residence/treating-a-dwelling-as-your-main-residence-after-you-move-out/
    TREBOR
    18th Mar 2019
    11:18am
    Well - those comments say it all - the bustards get you coming and going..Catch-a Twenny-Two.. she's-a read da same coming or going ..22..22..22 ... no madda which way you go dey get you..

    Only those cunning parasites who leech their property etc into 'trusts' and' family companies' etc get away with it..... no capital gain - they write 'im down as a 'business' asset...

    No wonder Shorten has the long knives out for them...
    rina1213
    18th Mar 2019
    11:41am
    So a question for all the up to date people. If you rent your house and rent one in another state do you still get rental assistance ? As the house would no longer be your principle place of residence and thrown into the assist pile with the rent as income. Interesting as I was thinking of this myself. Anyone with any info out there ?
    Cowboy Jim
    18th Mar 2019
    11:58am
    Best to make an appointment with a C/Link financial advisor and get the advice in writing in case they change their minds. They're muddy waters indeed.
    sunnyOz
    18th Mar 2019
    12:15pm
    Rina - you MAY - but as I have recently done this scenario - isn't worth it as CL take into account the rent your are RECEIVING, but not the rent you are PAYING. The small rental assistance you will get will in no way come near what your actual rent out will be. Would only be a slight bit better being on a couples aged pension (I was on single) - I had to stop doing it as it was financially killing me.
    Putting it simply...CL take into account the rent you are receiving on your primary house (less costs) and your pension would be reduced accordingly. BUT then you have to pay rent from the balance - rental assistance is only around $140 a FORTNIGHT for a couple. A bit useless as I really don't know anywhere you can get rent that cheap.
    McDaddy
    18th Mar 2019
    1:39pm
    If your former home is treated as an investment property and you rent elsewhere, you do qualify for Rent Assistance as long as you are receiving Age Pension etc. The max is app $135/ftn for singles and $128/ftn per couple. The net income after usual expenses will be added to the income test for your pension. May not reduce it though if it is the asset test determining your pension.
    sunnyOz
    18th Mar 2019
    12:09pm
    Don't do it - as the rent you RECEIVE cannot be offset against the rent you PAY. Just been through this. CL will take into account the rent you get from your home, but bad luck about the rent you have to pay to be near your daughter.
    GrayComputing
    18th Mar 2019
    12:23pm
    NO ASSET TEST FOR A PENSION EVER AGAIN!
    A pension is not welfare.

    Now is the season for discontent, so do something about it!
    It is time to kill off this insane hugely expensive pensioner whacking bureaucracy.

    It is time for all of us (yes that means you) to rant at our MPs and Senators daily to take action for human decency and a huge stress reduction for pensioners

    NO ASSET TEST FOR A PENSION EVER AGAIN!
    A pension is not welfare.

    Most economist say we will save taxpayers money by dropping asset testing because of the massive overheads cost in running Centrelink and the 10,000 conflicting rules.

    Hiring more Centrelink staff will only increase taxpayer’s costs for processing the creeping insane red tape monster system politicians and well paid bureaucrats have created.

    Help scrap it now. Become a hero.

    Even poorer New Zealand has a NO ASSET pension so it is cheaper and user friendly.

    Why worry that few million$ earners get it too. That is peanuts to them, not enough for a good vintage champagne.

    Do retired and retiring people really look forward and want 100++ visits to/from Centrelink and be part of 3 million waiting queues and lost calls?

    We all (that means you) need to tell our MP and senators every day that these criminal asset tests for a pension must be dropped now.
    Alexii
    18th Mar 2019
    1:41pm
    Fully agree with you, gray computing. i just wish the polls could come to realise this but they really just want to make life hard for all those who really do need a pension or part pension.
    GeorgeM
    18th Mar 2019
    9:24pm
    Yes, GrayComputing, just one of the many reasons why the current system is stuffed. Ideally it should be Universal Age Pension with NO tests, for all from Age 65 with say 15 years Residency paid out by the ATO with no need for Centrelink involvement.

    Yes, it is time for all to write to their MPS asap now to push for such a change and threaten & vote against any sitting MP who doesn't agree to support it in the final session of parliament coming up from 1st April - yes April Fool's Day. That's what they consider the normal people to be, as MPs have their own schemes.
    Cowboy Jim
    19th Mar 2019
    9:36am
    You can vote till you're blue in the face. Both majors are in cahoots about the current pension system and universal pensions will not happen.


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