Centrelink Q&A: Will loan and rent affect Age Pension?

How to assess the impact of borrowing to build a home.

Will loan and rent affect pension?

Laurie has plans to build a home, and wants to know how a loan and possible rent will affect his Age Pension.

Q. Laurie
I’m looking to get a loan to buy my next house but I will still own my present residence for a time while the new one is being built. I’m looking at renting out the new house over the short term while the old house is decluttered and then sold. This could take several months. At what point does this affect my Age Pension? Or, am I better off moving directly into the new home and then selling the old?

A. As soon as you take ownership of the secondary asset, be it a parcel of land or a fully built home, this will be considered an asset and will be assessed according to the assets test. Centrelink explains that the assets test counts any real estate you own, although not your principal home. This includes property you:

  • rent out, even when not getting rent
  • let someone live in for free
  • leave vacant
  • live in when you’re not at your principal home.

However, any loan you owe on the property can be deducted from your total assets.

Similarly, as explained, if you rent out your property, any income you earn will be assessed, although there are certain deductions you can claim in order to reduce the assessed amount.

Centrelink says you can claim:

  • loan interest payments
  • rates
  • costs to maintain the property.

But you can’t claim

  • capital depreciation
  • special building write off
  • costs to build
  • costs of borrowing money such as loan establishment fees.

Before making any financial decision, you should seek qualified advice. You may also wish to speak to a Centrelink Financial Information Service officer.

If you have a Centrelink question, send it to [email protected] and we’ll do our best to answer it, or find someone who can.


    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 the 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 financial planner, lawyer or tax agent in relation to any aspects that affect your financial and legal circumstances.


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    27th Aug 2018
    It is time for all of us (that means you) to rant at our MPs and Senators daily to take action for human decency and a huge stress reduction for pensioners

    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?

    Does your MP really like being part of the system that allows this indirect abuse of the elderly?

    This abuse is actually sponsored by our government and forced down to Centrelink and borders on a criminal act.

    Why do MPs normally compassionate persons let this Centrelink abuse happen at taxpayers’ expense?

    Some opposition and independent MPs stand to lose their chance at being part of the needed government changes

    We all need to tell our MP and senators every day that these criminal asset tests for a pension must be dropped now.

    Also do TODAY and every day, contact government, opposition and independent MPs and senators who could help us to get a fair deal on pensions

    28th Aug 2018
    That you're committed GrayComputing is a certainty, I admire your tenacity, as you've raised more than a few points, some clarification might help those of us bereft of wherewithal to grasp your take on the issue (as you see it), viz;
    ...."take action for human decency and a huge stress reduction for pensioners" - are you suggesting pensioners are being treated indecently and experiencing stress ?

    "A pension is not welfare." - How so ? it being sourced from the public purse, then how do you define it ?

    "Most economist say" - which economists are you quoting here?

    "creeping insane red tape monster system politicians and well paid bureaucrats have created." - You have conclusive proof they're to blame: it's not the result of every Tom, Dick & Carrie manipulating their respective affairs to 'milk the system' (cos we're entitled) ?

    "hero" (definition,among others) - 'a person admired for their noble qualities'.

    "Even poorer New Zealand has a NO ASSET pension - will New Zealanders remain poorer for that reason?

    "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? " - Probably not, but said people either fill the bill or make their own arrangements.

    ...."indirect abuse of the elderly? " - emotional hyperbole!

    "and borders on a criminal act." - which border, what act?

    "Why do MPs normally compassionate persons..." - MP's and "taxpayers expense" smacks of a double entendre surely ?

    As for the remainder - would you have us believe that you're as good as your word ?

    Doesn't the asset test strikes some small balance between the 'haves' and the 'have nots' ? - maybe not to your satisfaction obviously, but gubbermint in it's enviable wisdom (however dubious) would seem to view this issue in the clear light of day- as opposed to the view through rose coloured glasses.

    I encourage you to maintain the rage.
    28th Aug 2018
    A no brainer.
    People who did not save for a house when they were in their prime working lives will suffer later in life. Retirees who reach retirement with debt they are unable to pay out will do the same. When has it been any different.

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