Age Pension: can I offset losses against other income?

Can losses from an investment property be offset against other income?

Rental house concept jar of coins beside house figure

Walter is reviewing his assets prior to the threshold changes and would like to know more about how his investment property will be assessed, and whether or not he can offset losses.

Q. Walter
Can you clarify how assets affect Age Pension payments? To be specific, in relation to property that carries a mortgage – is the value considered on the basis of the value of the property, less the outstanding mortgage? Does this apply to both the family home in the same way as a rental property? 

A. In respect of rental returns, is the value of rent monies received as income offset by all costs for the property (i.e. both interest and other costs) in the same way as applies for taxation purposes? And, if this amount is in the negative, is an offset against other income (e.g. part-time work) applied?

The full value of your principal residence is excluded from the asset test, regardless of whether you have a mortgage on it or not. In regards to an investment property, Centrelink will make an allowance for any loan against the property and also take into consideration the actual percentage of the property you own.

In regards to rental properties, Centrelink does not allow the same deductions as the ATO. Your assessed rental income will be the gross income received, minus maintenance costs, interest payments and rates. If you are in the negative once these deductions are made, you will be considered to receive no income from this property. Centrelink does not allow you to offset any losses against other income.



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    3rd Oct 2016
    Looks certainly like a disincentive to own investment property in retirement.
    3rd Oct 2016
    That depends on how much you own Franky.

    I prepared a spreadsheet once that showed the average public servant forced into a defined benefit pension fund could have bought either 6 houses or 8 units with the same amount of money from 1975 to 2015.
    That is taking into account prices, rents, taxes etc.

    It sort of makes the supposedly wonderful pensions in a scheme that allows no concession cards, no tax concessions etc look like propaganda.

    That would equate to a lump sum final payout around 2.5 million and a very large fortnightly rental return now.
    double j
    3rd Oct 2016
    Can anyone advise the way centre link value a rental property , do they use council rates or real estate value because there can be a big difference in the valuations Cheers
    6th Feb 2018
    If you have an investment property with a mortgage and also cover it with a mortgage against your home you will not be able to use the property in any way as an asset and could lose your right to a pension because of this, the statement published by Centrelink referring to property assessments is not correct to how it is applied

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