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Residential aged care and your home

When it comes to moving to a residential aged care facility, your family home can be a key discussion point – for example, whether to keep or sell your home and the impact of your decision regarding Age Pension entitlements and aged care fees, including basic daily care, accommodation and additional care as needed.

If you enter an aged care facility, decide to keep your home and then rent it out, your home will be assessed under the Age Pension assets test after two years of continuous care and the net rental income will be assessed under the Age Pension income test from day one. Your home will be assessed up to a cap* under the aged care assets test and the net rental income will be assessed under the aged care income test from day one.

*Note: As of 20 March 2021, this cap was $173,075.20.

However, if you enter a facility and then decide to keep your home and not rent it out, your home will be exempt from the Age Pension assets test for at least two years. The home will continue to be exempt from this test while your spouse resides there – and if they enter a facility, then for a further two years.

Your home won’t be assessed under the aged care assets test if a person resides there and they are:

  • Your spouse
  • A dependent child
  • A close relative who has resided in your home for five years or more and is receiving an income support payment
  • A carer who has resided in the home for two years or more and is receiving an income support payment. However, your home will be assessed (up to a cap of $173,075.20) if they decide to vacate the property.
Selling your home

If you enter a facility and decide to sell your home, you will no longer benefit from the Age Pension assets test exemption or the aged care capped value for your home. If you place your entire home proceeds in a financial investment, the full amount will be assessed under the assets and income tests associated with the Age Pension and aged care.

If you use all or part of your home proceeds to pay for a refundable accommodation deposit (RAD) to the service provider, the RAD will be exempt from the Age Pension assets test – however, it will be assessed under the aged care assets test.

Making the decision to keep or sell your home when entering Aged Care can be complex. We can help you consider the various options and the impact on your Age Pension, Aged Care fees, and your overall wealth. Contact our financial planning experts at Accru Midsec today to discuss your situation and learn more about the options available.

 

Disclaimer: The information contained in this article is based on information believed to be accurate and reliable at the time of publication. To the extent permissible by law, neither we nor any of our related entities, employees, or directors gives any representation or warranty as to the reliability, accuracy or completeness of the information; or accepts any responsibility for any person acting, or refraining from acting, on the basis of information contained in this blog. This information is of a general nature only. It is not intended as personal advice and does not take into account the particular investment objectives, financial situation and needs of a particular investor. Before making an investment decision you should speak with your financial planner to assess whether the advice is appropriate to your particular investment objectives, financial situation and needs.