The Meeting Place

Leasing out your home and renting another

We are a pensioner couple considering selling our home in the city and downsizing to a home in the country.

We have identified a property that is being offered for sale with a short-term (12-18 months) lease-back agreement, allowing the current owners time to finance and build a new home on a smaller block they already own in the same district.

We would be happy with such an arrangement as the timing would also suit us, allowing us to spend more time tending to the needs of elderly parents and enjoying more child-minding time with grandchildren before they outgrow us.

To enable this we would have to rent a home in the city for 12-18 months after selling our primary residence. Our conundrum is this: will our new home in the country become an assessable asset, rather than the primary residence that it acutally is, because it is being rented, even though we would be paying an equivalent amount of rent for a short time while both parties re-establish themselves?

5 comments

 

Yes it would be, and the net rental income will also be assessed, however you would be considered Non Homeowners, therefore asset threshold is higher and if you reatin some Pension, you will also be able to receive Rent Assistance for the property you rent.

Thank you McDaddy, that gives us something to work with in our financial planning if we continue down that path. Much obliged.

I believe it's the 'gross rental income' that will be assessed not the 'net rental income'. Not certain that they will qualify for 'rent assistance'. 

Gee Gazza49, this is not the place to ask for advice. There are many people in this forum who have a lot of knowledge and can impart good advice but there are also a lot who wouldn't have a clue. Unless you can tell the difference it may be worthwhile speaking to Centrelink or a financial adviser to get the correct answer.

Not much point in having forums then. Or is it just a place for people to have a whinge, which seems to be more the case these days.

Not really a place just for whingers, McDaddy, but if there are things that will affect your future income I think that this may not be the place to find the correct answers. It's a good place for opinions and, God knows, there are a lot of them but sometimes when hard facts are needed it's a better idea to go to where the answers lie. My post was too general and I apologise for that, I should have been more specific. I'll be more careful in the future.

Agree Old Man, Gazza49, make an appointment with a centrlink financial adviser, or go to a Centrelink Seminar for the OAP & discuss your senario with them. Both are free & what is discussed isn't put on record.

https://www.humanservices.gov.au/individuals/services/financial-information-service/free-seminars

Hope all works out for you.

Sounds like an interesting condunrum.

Perhaps contact the ATO and after a verbal ask for a written ruling.

I'd be thinking that you could pay a deposit, put a caveat on the property and then settle just before the current owners go.

The situation may actually not be as complex as imagined as 1 year is no etended time and if the property became your primary residence for a decade or more the ATO would not go back that far anyway.

Either way get advice.  The ATO is the horses mouth so the best place to start and advice is free.  Good luck.

 

No Arvo it's definitely the net rental income. Their issue will probably be asset value og the home, rather than income from it.

5 comments