Centrelink Q&A: How does this sale affect Mavis’s Age Pension?

Mavis is considering the pension implications of moving into a retirement village.

How does sale affect Age Pension?

Mavis is considering the implications on her partial Age Pension if she sells her unit to move into a retirement village.


Q. Mavis
I am considering selling my unit and moving into a retirement village. My concern is what the effect would be on my partial Age Pension. Will the lease with the retirement village be calculated as my asset, like my car but not my home? Am I still eligible to apply for a reverse mortgage from Centrelink with the lease of the village unit?

A. How your Age Pension is affected is a tricky question as Centrelink uses a calculation based on the difference between the asset test limit for homeowners and non-homeowners, which is currently $203,000 for singles. If the amount you pay to enter a retirement village is greater than the difference between these two limits, then you will be considered a homeowner and the entry fee will not be included in the asset test.

You must also consider any amount you have remaining from the sale of your home after you pay the entry fee. This will be considered a financial asset and will be deemed to earn income. This income will be assessed for Age Pension purposes.

As you do not hold any equity in the property, you would not be eligible for the Government’s Pension Loan Scheme.

Before making any decision on selling your home, you should speak to a suitably qualified financial professional or, at the very least, make an appointment to speak to a Centrelink Financial Information Services officer.

If you have a Centrelink question, send it to newsletters@yourlifechoices.com.au 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.


    To make a comment, please register or login
    6th Aug 2018
    How can you abide with C.Link rules the staff can't give you a straight answer even if they can be contacted .C.Link is broken and getting worse most of it caused by our useless Fed. Government.
    6th Aug 2018
    You're right, floss. When our family (1 part-age pension, 1 on a disability pension), were penalised $4,000 pa in January 2016, it was almost impossible to secure a straight answer from Centrelink staff. According to my reading of the Centrelink rules, a person in a retirement village is regarded as a HOME OWNER. How can this be? The village operator owns the home. We only have lease to occupy the residence.
    6th Aug 2018
    floss, the reply to the question was given by ylc by which they stated clearly, make an appointment with centrelink to get the right answer!
    own the free-hold and you may be able to get a reverse morgage if lucky
    6th Aug 2018
    DON'T even consider a reverse mortgage! My neighbors recently got caught with one of these. When talking to them about the mess they were in, I am pretty sure they said something about not being able to take out a reverse mortgage if you reside in a retirement village or nursing home. But check everything out thoroughly. Check out the ASIC website - borrow $50,000 at age 60, and you could be facing a debt of $1,041,000 by age 90....
    6th Aug 2018
    Agree, sunnyOz. Keep away from reverse mortgages, unless you are prepared to lose the lot. You will only get 20% of 60% of the market value but you will pay a fortune in interest and fee charges. The banker will laugh all the way to his...bank.
    6th Aug 2018
    hs, rule no.1 you can't take it with you when you depart this world, so why worry, I also will laugh all the way to the bank by using that bank to make it easier for me to enjoy those last years,
    6th Aug 2018
    sunnyOz, I don't normally put negative comments against contributors but you are making three statements you know nothing about

    1) Your neighbours actual circumstances and their needs,

    2) The ASIC calculator information - ASIC acknowledges this example is wrong. Firstly it based upon an interest rate of 10% every day for 30 years. Current rates are 6.25 - 6.39% - a long way from 10% per day for 30 years.

    3) A reverse mortgage (better known as an aged care loan) is available if the borrower resides in aged care

    The only thing you are right about is that a reverse mortgage is not available when living in a retirement village.

    You made an opinion without due knowledge - there is nothing worse on social media
    Joy Anne
    6th Aug 2018
    Floss how correct you are.
    6th Aug 2018
    Our governments treat pensioners like shit. It's time we stopped this rot and made them accountable to us. We are ENTITLED to a pension, and the money from our house sale for these types of things remains sacrosanct and untouchable by Centrelink.
    Kick this government out of office and let the next lot know to ensure the pension becomes universal, without the BS we have to put up with at present.
    The Centrelink rules and complex and unworkable and cause enormous grief and anxiety, something we can do without in our last years.,
    6th 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 contact opposition and independent MPs (today) who could help us to get a fair deal on pensions

    6th Aug 2018
    Absolutely agree Centrelink has too much say in the lives of retirees - their role needs to be scrapped by implementing Universal Pension without any tests. And too much Centrelink admin costs spent to abuse pensioners
    At the very least they could copy the NZ system!

    All MUST write to their MPs and demand change & throw them out if they don't listen!
    6th Aug 2018
    My compliant is not with the staff it is just they have put so many off, C.Link can no longer function as it was set up to do.I have spoken to retirees that do not have access to a computer that just can't claim what they are entitled to.
    6th Aug 2018
    GC.your proposed system is the only one that can work,that may be the reason that the Libs have not adopted it.Great idea.
    6th Aug 2018
    floss, labor under whitlam whittled the money away into general revenue and wasted it, hawke and keating made the rules about to-day's pensions, I agree the libs never even attempted to rectify what happened, but as for you to just blame the libs, any wonder this country has lost the title of being the lucky and educated country in this world with contributions of the like of you to these columns

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