Scheme to encourage older Australians to downsize

Scott Morrison’s housing affordability plan offers incentives for retirees to downsize.

Incentives for retirees to downsize

As part two of Scott Morrison’s attack on housing affordability, a scheme to encourage older Australians to downsize will be introduced. From 1 July 2018 Australians aged 65 and older will be able to make a non-concessional contribution of up to $300,000 into their superannuation from the proceeds of the sale of a family home.

How will this work?

Helping George and Jane downsize

George and Jane, both retired and aged 76 and 69, sell their home in which they've lived for more than 10 years to move into more appropriate accommodation. The proceeds of the sale are $1.2 million. They can each make a non-concessional contribution into superannuation of up to $300,000 from the sale proceeds ($600,000 in total), even though Jane no longer satisfies the standard contribution work test and George is over 75. They can make these special contributions regardless of how much they already have in their superannuation accounts.

Case study source Commonwealth of Australia, 2017.

Opinion: Seller beware - there's a catch

The Budget documents state that this measure will ‘free up housing stock’ particularly ‘larger homes for younger families’.

But seller beware!

Debbie and I did the sums in the budget Lockup and think this policy clearly assists the budget bottom line in significant ways. The sale of more retirees’ homes will increase stock and the lower the price of homes, thus easing the housing affordability squeeze. However, as in the example of George and Jane, if they sell their home for (net) $1.2 million, then put $600,000 into super, it may assist the Budget, but they will probably be worse off.

How so?

Well we assume that the property is owned outright and the other half of the proceeds of the sale are used for a new dwelling which would be a considerably smaller property, perhaps in a less salubrious neighbourhood. If they have an ‘average’ couples' super balance, they probably already had around $300,000 in super. So, their new super balance they probably already had around $300,000 in super. So their new super balance is $900,000 (after half the sale amount is included) and this means they will not qualify for an Age Pension as they exceed the asset threshold for part Age Pensions. If they had not sold the family home, its value would be exempt from the asset test and they would receive an Age Pension.

So without any form of Age Pension at all, they will be forced to live on the earnings from their $900,000 balance. Drawing down the minimum of four per cent, they will have $36,000 per year to live on, compared to the full Age Pension they might have had, pre-sale, of $34,820 including supplements but with only the balance of proceeds ($600,000) to spend on what will have to be an inferior home, perhaps in a less desirable neighbourhood.

So make sure you do your sums very carefully, and check them with a qualified financial professional, before you put your home on the market. 

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    COMMENTS

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    KSS
    10th May 2017
    12:45pm
    So many assumptions being made here and everyone of them of course on the negative side. Why no mention of the tax saved? That tax amount would likely be more than the writer's $800 difference they claim. And frankly I don't care. If you have almost a million dollars in super then you should NOT be getting a pension in the first place. This is exactly why we have elderly people no longer able to maintain their homes that are worth millions and yet are able to apply for the pension making them asset rich but income poor. This is plainly wrong.

    If you want the tax concessions on selling the family home (and people here did want that) and to get it you put the excess money into super, then live on it! That is exactly what super is for. After about three years the super account may have dropped enough for a part pension to be claimed so just what is the issue. None except for greed yet again raising its head.

    And this is not to forget that no on will be FORCED to sell in the first place.
    AutumnOz
    10th May 2017
    1:11pm
    As I understand it the savings on tax will only occur if the seller already has superannuation to add money to, if they do not have superannuation they will be greatly disadvantaged by selling their house and down sizing, many folk in their 80s and 90s do not have superannuation and do not want to move from their home of 50 odd years.
    As for the aged not being forced to sell that could come in time as governments of all parties are unreliable when it come to keeping their promises.
    TREBOR
    10th May 2017
    1:24pm
    Simple answer - you give all the pension and then reduce it at the same rate dollar to dollar as pensions are from receiving income.

    The top returning super fund returned 7.6% in 2106 to 30 June - 'deeming' rates would mean a person in receipt of that return would receive a miniscule pension as a top-up...

    On a million bucks that is $76,000 - below the cut-out point for a couple. It seems inequitable that some should be permitted to earn more than pension rate when OAP pure retirees have no means of earning extra, but that is a big issue and needs a full airing.

    I think what you are suggesting, KSS - is that such recipients should be cut off at the current level of pension = $19,448 single, $34,819 for a couple, rather than being given a handout from pension funds as well as already receiving more than pension.

    Which ever way you look at it - the end result will not please any or most.
    jackie
    10th May 2017
    1:42pm
    Downsize your property so that the rich land developers can make a huge profit selling to those wealthy young folk that need to access their super savings to buy. Once again this deal benefits the wealthy in the end. It's a win win for the rich once again.
    Anonymous
    10th May 2017
    3:39pm
    If you don't have land developers jackie, who will open up land for housing? Governments and councils have walked away from land development as they find it easier to impose taxes and charges on developers. Naturally, developers will pass on those taxes and charges as they, like all businesses, are there to make a profit. If you want to complain about the cost of vacant land, complain to your local council and ask them to reduce the costs to developers and release more land. A lot has been said about values in Sydney and Melbourne but when all is said and done, it's a case of supply and demand.
    Trees
    10th May 2017
    5:26pm
    I like your thinking KSS.

    Autumn if you are in your 80s-90s & can live comfortably don't sell its your choice.

    I do have a question though & maybe you guys can answer it for me?

    If you can sell your house & put $300,000 single person or $600,000 a couple into super tax free that's quite a savings isn't it?
    Now if you don't sell & you pass away leaving your assets to your children for example, what would your children pay in death taxes??

    Has anyone had a look at what the difference in $'s it work out to?

    Just thinking whats so bad about down sizing if it means you use the money to travel or whatever pleases you in retirement & enjoy your twilight years. You can't take it with you so why not enjoy if you are in a position to do so.
    MICK
    10th May 2017
    9:28pm
    ????
    There is no tax on the sale of the family home KSS. There is no saving to be made as you don't have to put the money into super. Just invest it across a range of products. The only negative may be that if your investment give huge returns you may be paying a few dollars more in tac than the 15% super tax rate. At least your money will not be nationalised by a future government.
    I find this discussion so illogical.
    Swinging voter
    11th May 2017
    9:01am
    It is not greed to have worked hard, saved and have a desire to protect the results of thrift. The pension should be a universal payment in retirement as it is in New Zealand and similar other countries, and not something that is fought over. In this forum it usually sounds as if some who chose to spend their disposable income along the way on cars, holidays, clothes, eating out etc. and have finished up with few to no assets want to punish those who managed their affairs differently.

    It so often sounds like the green eyed monster raising its jealous head when others point out here how people should think about their finances, particularly when it involves advice such as, "None except for greed yet again raising its head." Accusations of greed are utterly uncalled-for, and in the case of high achievers, it is insulting. I prefer the idea that a country rewards effort and success without the tendency to batter people around the head over a few dollars at the end of their lives, just to prove that winners can also be losers.
    TREBOR
    11th May 2017
    11:02am
    The usual generalisation and assumptions, Swinging - some people have literally been through hell with various things in this life, and worked damned hard to end up with nothing.

    I know where the green-eyed monster is in all this - with those who already had a good run and now expect to be paid again, while those who had it tough can eat cake.

    'politics of envy' is on the side of those who can't bear the thought that someone might be getting something they can't qualify for, since they already have enough.
    Anonymous
    12th May 2017
    1:35pm
    My response to your post is mixed, Trebor. Yes, I agree that some have had a good run and expect to be paid again, and that's wrong. But on the other hand, some had a very tough time but managed to save a little and are now deprived of the benefit of that saving while others who had a great run but spent freely get handouts. I think it's reasonable for those with modest savings and unable to achieve high returns should object to having an income that is substantially less than the pension and having to drain their hard-won savings while others can earn over $70,000 a year and still get a pension, and spendthrifts who lived the high life put their hand out - often despite having $300,000 in shares earning good returns to top up their pension to a healthy income.

    Consider also that some of those who really struggled to achieve savings have particular needs that increase their cost of living. Just one example I am aware of: a battler who suffered major abuse in childhood and struggled all his life was finally able to achieve a victim compensation payout at age 68. The payout was deliberately calculated to cover the costs for substantial health, dental and optical care and personal care and home help needed because of his early suffering. But he now receives a minimal part pension and is draining his compensation for day-to-day living expenses instead of using it as it was intended.

    The system is a mess. It needs a total overhaul. I agree that envy and greed is offensive, but no more so than ignoring gross unfairness.
    Renny
    10th May 2017
    12:47pm
    Not many of us luve in houses worth over a million. This another advantage the well off policy. Just moved and rebuilt. No hundreds of thousands left over to invest. It's an expensive business and the difference in costs between a family home and a smaller place are on the whole negligible.
    AutumnOz
    10th May 2017
    1:18pm
    Most of the smaller places around this district are being built for retirement homes for the aged. The houses are tiny with an attached garage but very little space between the homes. The prices are also closer to one million dollars than half a million dollars. The main advantage being they are new and should not need any work done on them for several years.
    TREBOR
    10th May 2017
    1:25pm
    Yes - sell a suburban house and relocate to an ocean front unit and your money is gone.
    Rae
    10th May 2017
    2:21pm
    A lot of the new builds leak. In fact something like 80% of high rise has water problems so buying new will not necessarily save you needing work done on them. It's the shoddy materials from China and the Chinese plumbers apparently.
    MICK
    10th May 2017
    9:30pm
    Children: you have to be careful when you go out into the woods.
    This issue is a total beat-up and con. My suggestion for what it is worth is to ignore the call from this bad government and think about your individuals needs, then keep on keeping on.
    musicveg
    10th May 2017
    12:59pm
    I can't see this freeing up houses for young families, who cannot afford these houses, more like helping the foreign investors yet again, maybe the pollies want to buy your house to add to their portfolio's?
    MICK
    10th May 2017
    9:32pm
    Don't forget robbing your children of an inheritance because you get to live off the proceeds not the pension. These people know what they are doing. Bastards.
    TREBOR
    10th May 2017
    1:16pm
    The blatant difference in treatment between super holders and non-super holders stuck out like an elephant's cods to me from the first moment.

    Also not impressed much by moves to allow people into first home via salary sacrifice etc - all such moves are very rapidly taken onboard by the market and the agents, and generally lead to a rise in prices and costs anyway. I'm sorry to say but the entire issue of home ownership has been whacked out of kilter by other factors, and the only eventual outcome that will restore sanity is the failure of the market overall. That will lead to much pain for many who've over-invested on minute genuine equity, and for the banks who've unwisely loaned out to the feeding frenzy - but perhaps that simply means it is their time to share the pain.

    I've long related this current mad frenzy to the conditions that caused the Wall street Collapse in the 1920's - people borrowing on equity to buy more stocks and bonds, and then doing it again... put simply - you do not develop GENUINE equity in the short term, and the promotion of such a foolish concept is bordering on the criminal. It is also startlingly reminiscent of the antics of Alan Bond over in WA and the way he exploited 'equity' to continually upgrade his cash flow, while reaping massive fees and payments to self and family companies.

    That such schemes are permitted to continue to this day shows, to me, the essential criminal nature of our government while tied to donors and cronies.
    Rae
    10th May 2017
    2:18pm
    Yes TREBOR. An article today in the SMH detailed a 22 year old with 4 investment properties. When it gets to that the ponzi nature is soon to be felt I'm afraid. Last night my very high income earner son told me he has stopped consuming and is paying down debt as he's over being in debt. Can't be long before retail falls over and housing after it.
    TREBOR
    10th May 2017
    2:36pm
    Of course - your average politician housing investor will never not have income adequate to satisfy their 'need' to sustain their portfolio - get the boot from the electors and the party will find them a job to keep them going for life while they draw or wait for their 'pension'.

    So eventually all the property will be owned by the rich and their mates in politics..... all other pay rent.... a great return to the good old days of the feudal landlord....
    musicveg
    10th May 2017
    3:10pm
    I agree Trebor, I think secretly that is what they are planning, turn us all back to slaves. They are also working on taking Indigenous land rights away as well.

    http://wanganjagalingou.com.au/turnbull-offers-to-sacrifice-aboriginal-rights-to-adani-in-an-act-of-national-betrayal/
    TREBOR
    10th May 2017
    3:19pm
    music - that sounds like 'steady erosion' of Indigenous rights that 'stand in the way' of 'infrastructure for the nation' and 'jobs and growth' and 'economic necessity'....

    How long before we see a repeat of the Arukuun Incident, where developing an oceanside resort for visiting Asians was more important than Indigenous rights?

    When it comes to the big boys - roll over, Beethovenagunya... and get out of the way of civilisation and development, boy....
    musicveg
    10th May 2017
    3:54pm
    Yep, pretty much what they are doing in many countries. Does not matter if your ancestors have been living there for 100's or 1000's of years, the land is taken by developers (ie Government developers too). Adani has already got a reputation of environmental damage, and has already done so in the Casey wetlands that it was told to protect.And then will they pay any taxes?
    TREBOR
    10th May 2017
    6:28pm
    No - taxes are very low on their list of priorities, and the most blatantly obvious danger for this nation in 'encouraging 'investment' from offshore corporations is that they will spirit away the profits while writing it all off against costs and repayments listed offshore, often in a 'sister' company or whatever.

    There must always, as well, be massive concern over any legislation that permits an 'out' through using 'best public interest' to over-ride other claims.... for Indigenous (and other) rights, that can mean that a 'court' in the hands of a government of the day, can rules that the 'public interest' out-weighs the rights involved, which are only 'paper' rights, after all and not civil or human rights.

    The price of liberty is eternal vigilance, and nowhere more clearly than in the perpetual civil war between government and people for ownership of the top of the hill........ that last is something a lot of people could start thinking about very seriously. It's a theme I've been working on for a while now - in between bouts of laziness and other responsibilities....
    MICK
    10th May 2017
    9:34pm
    Good post Trebor.
    Puglet
    10th May 2017
    1:27pm
    Before we downsize there are other things to consider - for instance It will cost about 80,000 all up to sell, buy and pay all those taxes and then perhaps move into a retirement village. I am renovating my home and 'geriatricising' it in case I need mobility frames etc for significantly less. The money I save by not downsizing can be used to pay a person to help with garden and if need be clean the house and me! I keep my dog and garden! No body is mentioning that the Home Care Package has been put off for 2 years. This would have made it possible for the elderly and increasingly frail to stay in their own home and bed. grrhhhhh!
    Kaz
    10th May 2017
    1:28pm
    Good perspective!
    Rosret
    10th May 2017
    1:46pm
    Exactly - and it wasn't so long ago that there was a government initiative for people to remain in their home because it saved on very expensive nursing homes.

    At least there is no mention of "have to" .....yet.
    Rae
    10th May 2017
    2:13pm
    Yes and why have the disabled by age been kept out of the NDIS. Blatant age discrimination. You can access NDIS up until 65 only.
    TREBOR
    10th May 2017
    2:20pm
    Yes, Rae - it's a nonsense to be excluded at a time when long term disabilities are most likely to get worse.

    I've long had the same argument about TPI for veterans - why does a
    Veteran who turns 65 suddenly become less injured that he/she was forty years ago? If you can push your application through one day before you get TPI for life - one day later and you get Service Pension only.
    MICK
    10th May 2017
    9:36pm
    Stay in your own home as long as possible unless there are extenuating circumstances. This Budget item is a con and those who take it up will be sorry down the track.
    Justsane
    11th May 2017
    2:12am
    Don't sell your house and go and live in a retirement village. Someone who should know gave me this advice the other day. People think that they will get more care in a retirement home, but this is not true, at least in WA.
    Kaz
    10th May 2017
    1:27pm
    I say f u. People want to stay in their homes if they can, homes that they worked all their lives for and paid a mortgage (some through the terrible 17% interest days), insured, raised children and maintained with after tax dollars.
    TREBOR
    10th May 2017
    1:36pm
    Yes - it is a stress factor to 'lose' a home or move homes. The time to relax has become more like - "he/she who would prefer peace and quiet, must prepare for war".... disgraceful after what, for many, has been an extremely stressful life time dealing with massive and often unthought out changes in society and such, and the often carefully thought out chicaneries of politicians and other arms of government bent on destroying the power of the individual.

    Those who've managed to come safe home with their home and family intact should be left alone to enjoy retirement and not harangued by desperate politics seeking a way into their wallets at every turn.
    MICK
    10th May 2017
    9:37pm
    Whilst I may not agree with your language Kaz I totally agree with your post. This call to downsize is a con and I hope older Australians are not duped by it.
    Rae
    10th May 2017
    1:37pm
    I'd be very careful moving large amounts of funds into non concessional super. In some case up to 50% non concessional amount has been deemed at only 10% . Sovereign risk is far too high. It would be safer to keep it out of super as a couple can earn a lot without tax and even more with only a small tax.

    Just be very careful.
    MICK
    10th May 2017
    9:42pm
    I agree. Just add to that to NOT put any more than $250,000 TOTAL into the big banks as the government can take this money if there is a global meltdown. That means $250,000 between all of the banks as the 4 pillars are considered one bank if the unthinkabke happens. Spreading amounts between safe smaller banks looks safe though.
    It's shark infested waters out there Rae. Don't trust your government. Only simpletons do that and they will suffer the most if bad things happen...and yes we appear to be building up to something bad but who knows.
    Rosret
    10th May 2017
    1:43pm
    This is an excellent article. Houses in Sydney are $1.2m. However they still need somewhere to live and it won't be in the CBD for $600K less sales tax, transition costs, and removal costs.

    You can't buy a home or apartment in my country town under at least $650K and having done a house hunt with my son recently in the cheaper areas the entry level apartments are not suitable for the elderly and houses were absolutely horrid - filthy pull down homes.

    Sure you can move even further out from the major cities but then the cost of getting to the city of medical treatment is very expensive and often requires an overnight stay in a motel. So exhausting and costly.
    sauci-tab
    10th May 2017
    1:45pm
    We are a pair of baby boomers who worked hard for our house and are now just "caretaking" for the kids. On a full pension. Would a better plan be that we could sell off downsize but give the difference to our kids thereby making it possible for them to buy????
    Rosret
    10th May 2017
    1:48pm
    No. You have a long life ahead of you.
    Sundays
    10th May 2017
    4:13pm
    Check the gifting rules with Centrelink first. I think you'll find that the money you give to the kids would be classed as a deprived asset and you may lose some of your pension. You would be worse off
    MICK
    10th May 2017
    9:44pm
    Dangerous. Gifting to the kids will incur a 5 year reduction and/or loss of pension.
    My call would be to sit pat and leave your children your home. Unless this bad bad government reintroduces Death Duties your home should be safe.
    Chris B T
    10th May 2017
    1:51pm
    I have reposted this as this is more revealnt.
    There is a Nominal Value for your home, couple home owners of $370k.
    This is madeup of the additonal assets allowed $200k and Rental assisttance (useing deaming rates). Non Home Owners
    There are a lot of couples already at this Value of Home and way below and above.
    With this extra money and costs associated with downsizing what real benefit other than change of location maybe, and smaller manageable home maybe will you receive.
    Frustration and confussion moving forward, really add to super a non Government Guarantee Fund.
    It should be around $370k to match the Nominal Value as additonal non asset testing amount. (The differrence between Couple Home owners and Non Home Owners)
    Used freely, who's refunding the costs with down sizing and moving.
    Think Very Carefully about all the consequences as there is no Do Overs except by the Government where they will DO YOU OVER as many times they can.
    MICK
    10th May 2017
    9:56pm
    A DO OVER is precisely what this is. Good luck to anybody who thinks they are being given anything by this government. Four years of them should have told people that.
    Nanday
    10th May 2017
    2:24pm
    Although this change benefits me in my particular situation (I have subdivided my home block and plan to sell the family home and build on the smaller block), overall I can't see much benefit to the larger pensioner population. In the past 2 years as I went through my subdivision, I have talked to many interested neighbours who are themselves boomers who no longer want the work or responsibility of a big home/garden. They want solutions that will allow them to preserve assets and remain in or close to their familiar neighbourhood. I can't see how allowing a top-up of superannuation is going to achieve this.

    Perhaps if the legislation had allowed for the $300,000 to be exempted from the pension assets test, it might have moved the boomers, literally as well as figuratively.
    TREBOR
    10th May 2017
    3:22pm
    Yes - that $300k is the nub of the matter - one set get a benefit, the others don't, and that division is deliberate. The 'good' get it, the 'bad' - the wasters and losers - don't... and as for the ugly.. well - they still collect taxes from both....
    MICK
    10th May 2017
    9:58pm
    Preserving assets for the next generation is precisely what this bunch do not want you to do.
    TREBOR
    11th May 2017
    1:22am
    ... unless it is their assets..... then it's fair game....
    Old Geezer
    10th May 2017
    4:11pm
    I personally can't see any benefits in this scheme at all for anyone.
    Nanday
    10th May 2017
    4:43pm
    There might be, for a small group like myself. I am a self-funded retiree. I decided 2 years ago to subdivide my home block, sell the family home and use part of the sales proceeds to build a smaller home for myself on the smaller block. I have had to draw down my SMSF pension by over $100,000 to pay for the subdivision costs, so that amount reduced my SMSF balance. This legislation will allow me to return the subdivision costs to my SMSF, provided I sell my family home for what I hope to get. However the benefits are small. If I get a net $200,000 cash profit after the selling/building process, all I could get in conservative investment (interest) is about 3%, or 6,000 per year. As I have no other taxable income, I would not pay tax on it anyway . Putting it inside the SMSF tax-sheltered would guarantee no taxes, and if interest rates ever do go up again, I might see some benefit. So it seems there is no benefit in the short term, but depending on interest rates and SMSF returns, there might be in the long term. If I had not already made the decision to subdivide and downsize, this legislation would not have made a difference to my decision.
    Old Geezer
    10th May 2017
    8:18pm
    Question to be asked is does the money have to be the difference between old and new dwellings? Or can it be $300,000 just for downsizing? Devil is in the detail.
    Chrissy L
    10th May 2017
    9:23pm
    Wow OG I think this is the first time I have ever agreed with you!
    TREBOR
    10th May 2017
    10:32pm
    OG - I am flabbergasted... lost for words... you hit it right on the head there.
    tams
    10th May 2017
    4:32pm
    Besides the amount placed into super being assessable, it would also be assessable for means testing in aged care
    TREBOR
    10th May 2017
    6:34pm
    Always beware freaks bearing grift... there is always a cloud around any silver lining... and those clouds have rocks as they say in the flying business...

    You can bet your bottom dollar - and probably will - that every aspect of this scheme has been worked out in fine detail in some smoke and good brandy-filled room backstage of the government.... and all the answers worked out and trained into the mouth-pieces for the cameras...
    Chrissy L
    10th May 2017
    9:17pm
    You are right Trebor, probably Havana Cigars too!
    MICK
    10th May 2017
    10:00pm
    The best. Smokin' Joe would approve.
    TREBOR
    10th May 2017
    10:35pm
    We don't hear much about his wonderful prowess as 'Embers Stacker to the US'... why is that?

    Does his party want to keep him out of sight - out of mind - lest the peasants recall his amazing perspicacity in determining the best course for the economy, and reach for their pitch forks and flaming brands?
    Rodent
    10th May 2017
    5:21pm
    I find it interesting that the Govt Estimates that 10,000 people will take up this option , over the 4 years. How on earth would that ever be estimated. The Budget "costs" are based on this figure?

    The Super Guide Newsletter covers this issue well. refer www.superguide.com.au
    TREBOR
    10th May 2017
    6:35pm
    The budget also relies on the mystical Jobson Growthe..... someone conspicuously absent without leave...
    MICK
    10th May 2017
    10:01pm
    Better known as BS Rodent. This government runs on it.
    Chrissy L
    10th May 2017
    9:11pm
    I have re-posted my comments from yesterday. I am really concerned watching Seniors on TV thinking this is a good thing. It is NOT for a lot of people. If you are a Part Pensioner - BEWARE
    See a trusted Financial Advisor before making a move.

    "I really don't think there was anything in this budget for pensioners/part pensioners/retirees. Maybe a little bit, if you want to downsize your home and value, but then your pension gets a hit or you may lose it completely, depending on how much money you have. You would need to factor that in. THIS GOVERNMENT JUST DOES NOT GET IT.
    They are being dragged kicking and screaming, adopting diluted policies of the Labor Government, along with putting the boot into the young people of our country by putting up Tertiary costs and reducing the time for them to pay it back to try and try to get some street cred to scrape back into Government. More attacks on the Welfare recipients. All whilst investors get a free ride on negative gearing and the top end of town continues to get richer. The Banks will pass on their increased costs to their customers to ensure their profits remain obscene. Debt has increased under this Government and future plans to surplus are all just "pie in the sky" forecasts. I think they are an insult to the intelligence of Seniors. Sorry Malcolm and Scomo...I don't believe in Santa Claus either! "

    I haven't missed the $75 one off payment to help with Power costs. It will reimburse me for Seven and a half weeks of what this government has ripped off me as a Part Pensioner in the recent Asset Test Changes. Sorry, I am not excited about it at all. This is another con job by this government to try and scrape back into Government at the next election. The bottom line is that Part Pensioners and Retirees have been used as an easy target by this Government to reduce our Income in Retirement. I hope they all get thrown out at the next election they could easily get a job selling dodgy cars, they have the experience in buckets loads.
    MICK
    10th May 2017
    10:03pm
    Yeah, I found it interesting that commentators were saying this was a good deal for seniors. I wonder who is paying them to spout such nonsense. Like you I hope seniors are not duped into believing a word of it as utter BS.
    Rae
    11th May 2017
    7:43am
    Yes Chrissy. It should be remembered that negative gearing is investing in a loss making proposition and hoping for a capital gain in the future. I've been investing for nearly fifty years now and the only times I've lost large amounts of capital was when I tried this type of leveraged speculation.

    It is entirely possible that these speculators will save a minimum amount of tax and lose very big chunks of money.

    If they have used their own home as collateral then that is even worse in the event of a market meltdown. And boy are the markets acting skittish right now. I keep thinking I should pull everything out but then as MICK said the money in the bank isn't safe either since those G20 bail in rules were legislated.

    A lady I know is beside herself right now. With a husband suffering early onset dementia she sold her home and moved into a beaut retirement village and regrets it badly. The high weekly costs are eating into savings and they lost the pension completely meaning all the medical costs and drugs are full price.

    She is now unsure how to manage in the future and how to afford the aged care costs when necessary. The bond may take her cash and then the single pension won't pay the village costs.

    The worry is making her ill.

    Unfortunately the government is being run by investment bankers and developers and the crazies from the IPA.

    And they don't give a rat's razoo about any of us. We are just ex workers with savings that can be fleeced.
    Anonymous
    11th May 2017
    3:23pm
    Rae, this lady has made one fundamental mistake.

    She should have taken advice before she made this decision.

    I know for a fact that all retirement village paperwork advises prospective tenants to "GET FINANCIAL ADVICE" ...get the contract looked over.

    Reading between the lines she must have sold her home for quite an amount of money to lose the pension. Surely she must have known this would happen??

    Centrelink have financial advisors and they could have helped her before she made the move.

    You must do your homework before you sell up and move to a liftestyle or retirement village. You are aware of the costs before you move in. Did she not understand what she was entering into?
    MICK
    10th May 2017
    9:23pm
    Respectfully Kaye and Debbie but I think there is a lot more to this than what you have written.
    The question is WHY would these people sell their home and move into a smaller one?
    1. they probably would move out of an area where they are well established with friends and shops, etc. Bad.
    2, the reasons you mentioned. Bad.
    3. taking money out of the family home takes it from a tax free environment to one where they potentially are taxed more or they lose a part pension. What is the sense in that? Essentially this is saving the government money and I suggest that this is the entire purpose of the move.

    If you think that there will be an appreciable change in home affordability then dream on. There won't. Only interest rates going up will do that and given the large number of Australians who have invested in property no government will risk bankrupting this large group lest the party in left out of office for decades until the pain is forgotten and a new generation comes along.

    My prediction is that this will do nothing as retirees are not as stupid as that and will not take up the offer. Oh yes...the mentally challenged may. Good luck to you guys.
    Nanday
    11th May 2017
    3:32pm
    A further risk is the 'mom-and-dad bank' that many boomers have become. I just read about a NZ court case where parents funded a daughter's investments to the tune of a loan of $350,000 or so, and she refused to make repayments despite repeated requests (and owning a property portfolio). The court ordered her to repay her ageing parents.

    It's another reason why a lot of boomer pensioners might be hesitant to downsize into something cheaper - if the kids know that the end result is a spare $300,000 to tap into, there will be some who put their hands out and too many who pressure or even abuse elderly parents to get the money. If this seems far-fetched to some, think about all the anti-boomer articles that are written blaming us for all the financial problems of the younger generations. They see us as selfish and unprincipled people who have made more money than we deserve and are sitting on/spending their inheritance. When I told my 35 year old son that house prices in my area had gone up he said "I can hear the boomers salivating over that".

    I think the government has made a guess of the number of 10,000 taking up this offer. It will be interesting to see how many really do so.
    Triss
    10th May 2017
    9:27pm
    Wonder how many politicians will be buying up pensioners' million dollar homes on negative gearing.
    MICK
    10th May 2017
    10:04pm
    Funny. Don't put it past them though as many are into property investment and some in a big way.
    TREBOR
    10th May 2017
    10:39pm
    Ummm - not buying up - just waiting in the wings with compliant banks standing b y to give them anything and everything, since they have guaranteed incomes for life now.... unlike the peasants.

    Soon to be - a return to the government and governance of the feudal lords, all other pay rent, and put in their bit happily to provide well for the lords....

    I thought we left that one behind seven or eight hundred years ago... guess I was wrong....

    Do Politicians Dream of Electronic Sheep? (apologies to Philip K dick)....(Blade Runner for the Philistines)...
    Old Geezer
    11th May 2017
    1:03pm
    They will have to use their parliamentary expense account now to pay their expenses to inspect their properties as it is no longer allowed as a tax deduction.
    Cruiser
    10th May 2017
    10:52pm
    Great for wealthy retirees not on the pension, good tax break, nice bonus from the Lib budget. If a part or full pensioner, bad luck, you get zilch, situation unchanged, disappointing, could have done a lot more, not unexpected, SNAFU.
    Old Geezer
    11th May 2017
    1:01pm
    I really concerned about the government wanting young people and old people down sizing to put there money into super. Is it the first step to nationalising super?
    Anonymous
    11th May 2017
    4:42pm
    There are a lot of retirees who are not that far over the limit...all self funded retirees arer not fabulously wealthy as some may think and they do not get the concession card etc that those on the OAP get. They pay full price for everything.
    Sallad
    12th May 2017
    12:47pm
    Great points raised by Kaye ( & Debbie). I would strongly urge any "Pensioner" considering this initiative to first and foremost make an appointment with Centrelink's (FREE) specialist FISO (Financial Information Service Officer) to crunch the numbers. They can explore all your options and give you a report on the possible impact on your age pension entitlement. Its a FREE unbiased service - just call 13 2300 to make an appointment.
    tia-maria
    12th May 2017
    7:40pm
    I just wonder how many Politicians will give up their homes and down size????? none their wives would not allowed for that to happen..........What can I say?? just maybe Politicians should practice what they preach..........first on the list PM Turnbull and Morrision when you retire don't forget to down size into a shed


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