Financial help with downsizing

June is looking to downsize and recalls hearing about a program which would exclude some of the proceeds from the sale of her house from the pension means test, but she can’t find any details.

Q. June

We’re considering downsizing our home and can recall a program which allows some of the profits made from the sale of our home to be excluded from the pension means test, but can’t find any details. Can you advise what the program is called and how we can find out more?

A. The program that I believe you’re referring to is Housing Help for Seniors, which was due to commence as a pilot program from 1 July 2014. Under the program those claiming the Age Pension would be able to downsize and invest the additional funds, capped at $200,000, in a special account. The funds invested and any interest earned, would be exempt from asset and income testing for up to 10 years. However, in the Federal Budget 2014, this program was culled to help repair the budget. The previous Government had allocated $173.1 million over five years to fund the pilot.

While this may not be good news, it is worth remembering that when you sell your house the proceeds are exempt from the means test for a period of 12 months, to enable you to buy another property. If you have been unable to find a property in 12 months, you can ask for an extension, up to a further 12 months.

Written by Debbie McTaggart