15th Oct 2015
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Selling the family home
Selling the family home

Many older Australians consider downsizing, but the effect on their Age Pension can mean it is costly to do so. So, how can it affect pension payments?

Q. Colin

Please, could someone advise me? I am on a full Age Pension. I want to sell my apartment, move interstate, rent whilst searching, then buy a new (cheaper) apartment.

How will this affect my pension, assets, etc.?

When you sell your main residence, the amount you receive becomes an exempt asset for a period of 12 months. This is to give you time to choose a suitable housing option and should you struggle to do so within the timeframe, you can apply to Centrelink to have this period extended by up to 24 months.

The proceeds from the sale will be deemed to earn interest and this will be assessed under the income test, which may affect your Age Pension payment. Your Age Pension payment is reduced by 50 cents for every dollar you exceed the income threshold.

As soon as you buy your home, any amount left over is considered an asset and will be assessed as such. Your Age Pension payment is reduced by $1.50 for every $1000 you exceed the asset threshold.

Your Age Pension payment is the lower amount calculated when the income and asset test are both applied.





    COMMENTS

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    jackyd
    23rd Oct 2015
    10:49am
    Hmm, I thought Scott M, when changing the pension qualifying criteria, was going to increase the asset threshold for the single age pension to $250,000 but that figure seams to have remained at 204,000.
    Any clues about that one?
    jackyd
    26th Oct 2015
    7:05pm
    Found a possible answer, that reform doesn't kick in until 2017.... but who do you trust...
    MICK
    23rd Oct 2015
    12:22pm
    In other words the government will say spend your money first and then come back. This is one reason why many very well off people but really expensive homes: they figure out how much they need to live on and collect some pension. Then when they pass on their children get the full benefit of the family home tax free. Any wonder Hockey was after the family home in the assets test. Next cab off the rank for this government is estate duties. Wait for it.
    Nan Norma
    23rd Oct 2015
    1:27pm
    It is not fair to count the home you live in as an asset. it is not earning any income and costs money in up keep. Oh, and I don't have one of these expensive houses either.
    niemakawa
    23rd Oct 2015
    5:54pm
    Agenda 21 will make these decisions for you. The UN had some "persuasion" into the demise of Mr Abbott and the same with the recent election in Canada. Your home will not longer be your castle.

    23rd Oct 2015
    12:54pm
    Come 1/1/2017, downsizing and having that extra cash assets as a result of profit on one's prior home will have a negative effect on the Aged Pension. The negative effect will be even greater if one's assets are above the then lower asset threshold. So, seek trustworthy advice before changing your lifestyle or you may be doing the government a favour rather than yourself. Good luck.
    Chris G
    23rd Oct 2015
    2:49pm
    Hmm .... seems it is a case of "Damned if you do, and damned if you don't!"
    MICK
    23rd Oct 2015
    5:43pm
    Life's often like that. Always nice if you can have your cake and eat it too.
    tia-maria
    23rd Oct 2015
    5:57pm
    Hey Mick, you got that right...........that only apply to our fat cat politicians...........
    happy
    23rd Oct 2015
    3:30pm
    Carping about older people living in large family homes, but make it tò our disadvantage to downsize. Best stay in your familiar surroundings. The rules change so often it is almost impossible to make financial plans that are meaningful.
    MICK
    23rd Oct 2015
    5:44pm
    About right. Leave the kids something too. That's what decent parents do.
    Linda
    23rd Oct 2015
    5:46pm
    I agree Happy, not to mention the actual costs involved of preparing to sell, selling, buying, relocating belongings, stamp duties, and the like. Add to that the retirement village property rip offs, and it makes no sense at all. Homes go up in value for some because of property investors, speculators, developers, these things are not instigated by home owners. Those that say the home is an investment have one kind of logic, those that say it is a home, an abode have another view. Again, retired people are seen as the honey pot to be robbed, pillaged by money hungry people. Easy pickings .....

    24th Oct 2015
    10:54am
    It would be terrible if you had to pay your own way
    DaveL
    29th Oct 2015
    9:15am
    In the UK they have an inheritance tax. The faimly up to a value of one million pounds (abot $2.3 million Australian) is exempt from it. David Cameron stated when announcing this new limit in July, "it is to assist in passing this asset to the family".


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