In this month’s article we will look at the assessment of the former home and what needs to be considered before making any decisions. We will use a case study to demonstrate the implications of keeping, renting or selling the former home.
For Centrelink purposes, the former home will be exempt under the Assets Test for two years from the date the person leaves the home. Where the person is a member of a couple, the former home will be exempt for as long as their spouse continues to live in the home. If their spouse leaves the former home to enter residential aged care as well, it will be exempt for two years from the date their spouse leaves the home. While the former is exempt, the person and their spouse will be considered a homeowner under the Assets Test.
For aged care purposes, the value of the former home will be exempt where the home is occupied by a protected person. Where the former home is not occupied by a protected person, the home will be assessed up to the home exemption cap (currently $201,2311). A protected person includes:
For Centrelink and aged care purposes, where the former home is rented out, the rental income will be assessed. Assessable income for Centrelink and aged care purposes is the same as assessable income for tax purposes with some exceptions. Certain tax deductions are not allowed for Centrelink and aged care purposes including capital depreciation, construction costs and borrowing costs.
Financial advisers only
*Rates may vary. Annual payment with capital returned at the end. Issued by Challenger Life Company Limited ABN 44072486938.
The information on this webpage is intended to be general information only not financial product advice. In no circumstances is this information to be used by a retail client for the purposes of making a decision about a financial product or class of products.
