How owning a home can affect pensions and payments

This page explains who is a homeowner and how the home affects pensions and payments.

The rates on this page are effective from 20 September 2024.

Who is a homeowner?

You can be regarded as a homeowner if you own, or are paying off your home or have a right or interest in your home and that right or interest gives you reasonable security of tenure.

What is considered a home?

In most cases a home is usually a house or a unit. A home can also be a caravan or a boat if this is the person’s usual place of residence. Please note that retirement villages and granny flats are special cases and are treated differently.

Refer to Granny Flats, Retirement Villages and Sale Leaseback Agreements for information on granny flats and retirement villages.

What is considered as part of a home?

Items that are included as part of the home are:

• the residence itself (eg. house, unit, caravan)
• permanent fixtures such as stoves, built-in heaters, dish-washers, light fittings and affixed carpets
• the land around your home and on the same title as your home - up to 2 hectares (5 acres) of private land, or all land if certain conditions are met - any excess land is counted as an asset
• any garage, shed, tennis court or swimming pool that is used primarily for private purposes and is on the same title as your home.

Is my home considered an asset?

Your home is not counted as an asset when calculating pension or payment, but it does affect how your pension or payment is assessed under the assets test.

If you are a homeowner your asset value limit is lower than someone who does not own their residence. The asset value limit is the amount of assets a person can own before their pension or payment will reduce from the maximum rate under the assets test.

Example: Currently the asset value limit for a single Service Pension homeowner is $314,000 and for a single Service Pension non-homeowner is $566,000. The current maximum rate of single Service Pension is $1,144.40.

A single homeowner on Service Pension has $580,250 in assets. Their rate of pension under the assets test would equal $345.65 a fortnight.

If the same person was a non-homeowner their rate of pension would equal $1,101.65 a fortnight.

For more information on how the assets test works, refer to Assets Test.

What happens if I leave my home to enter care?

If you vacate your home because you are entering a care situation, your home may continue to be regarded as your principal home for a period of up to 2 years and, for that period, is not counted as an asset.

Your home also remains exempt if your partner is living in the principal home. When your partner vacates the home to enter care, or if they pass away, the 2 year exemption period will start from the day your partner leaves the home.

If your former home is sold during the 2 year exemption period after entering care, your principal home exemption ceases and you will be considered a non-homeowner. This applies even if another house is purchased with the sale proceeds.

What happens if I care for another person?

If you are absent from your home because you are personally providing community-based care for another person, your home continues to be regarded as your principal home for up to 2 years, and is not counted as an asset.

What happens if I rent out my home while I am in care?

Special rules apply if you are in care and all of the following applies:

• you entered care before 1 January 2017
• you are paying a daily accommodation payment, a daily accommodation contribution, an accommodation charge, or an accommodation bond wholly or partly by periodic payments
• you are renting out the former home.

The rental income and the value of your former home are not counted in working out the rate of your pension or payment for as long as the above conditions are met. If any of these circumstances change, you must notify us within 14 days.

The exemptions do not apply if the accommodation costs are paid by lump sum only or if you entered care on or after 1 January 2017.

How does selling my home affect my pension or payment?

If you sell your home, you will need to tell us what you intend to do with the money from the sale.

If you intend to buy a new home within 24 months, then the portion of the sale proceeds that will be put towards the purchase of the new home will be exempted under the assets test for up to 24 months. Deemed income on the proceeds will be included in your assessment. The proceeds will become assessable under the assets test at the end of the 24 months exemption or when the home is acquired, whichever happens first.

If you are experiencing delays beyond your control in acquiring a new home, you may ask for an extension of the asset test exemption for up to an additional 12 months.

Rent assistance may be payable if you pay rent while you are looking for another home, or are waiting for another home to be built.

If you do intend to buy a new home within 24 months, only the lower deeming rate will be applied to the home sale proceeds intended for acquiring a new home during the exemption period.

If you do not intend to buy a new home within 24 months, or do not intend to spend all of the proceeds on the new home, then the sale proceeds or the excess proceeds will be treated like all other financial assets and deemed at the applicable rate.

If you move into a self-care retirement village after selling your home you may be classified as either a homeowner or a non-homeowner depending on the amount you pay as an entry contribution.

Refer to Selling Your Home, Help with your rent and Granny Flats, Retirement Villages and Sale Leaseback Agreements.

How does leaving my home temporarily affect my pension or payment?

If you are absent from the home but have a clear intention to return to live in that home, you are considered temporarily absent. In this case, the home is not counted as an asset during the first 12 months of absence, but after that period the value of the home may be included as an asset in calculating your pension or payment.

How does leaving my lost or damaged home affect my pension or payment?

If you are temporarily absent from your lost or damaged home, but have a clear intention to either return to live in that home or acquire a new home, you are considered temporarily absent. The lost or damaged home is not counted as an asset during the first 12 months of absence.

Rent assistance may be payable if the lost or damaged home is uninhabitable and you are temporarily renting elsewhere while you are looking for another home, or are waiting for your home to be repaired.

Any insurance or compensation proceeds that you receive for the lost or damaged home will be exempted under both the income and assets test for up to 12 months. These proceeds will also be exempted from the deeming provisions. The proceeds will become assessable at the end of the 12 months exemption or when the home is rebuilt or repaired, whichever happens first.

However, if at the end of the 12 months your home is not yet rebuilt or repaired, and you have not otherwise sold your home and purchased another home, you may ask for an extension of the above exemptions for up to an additional 12 months. To be granted an extension you must be able to satisfy all of the following requirements:

• the loss or damage to the home was not willfully caused by you or your partner
• reasonable attempts have been made to acquire a home (buy, build, repair or rebuild)
• these attempts were made within a reasonable period after the loss or damage
• you are experiencing delays beyond your control in repairing or rebuilding your home or acquiring a new home.

The extended exemption will cease when the home is rebuilt or repaired, or the old home is sold and a new home acquired, or 24 months after the home was lost or damaged, whichever happens first.

Obligations

When you are granted an income support pension or payment and periodically after that, you will be notified of your obligations. You will be required to tell us within 14 days (28 days if you live overseas or receive remote area allowance) of changes to your circumstances that might affect the rate of income support pension or payment you receive or your eligibility to receive that pension or payment. These obligations apply equally to trustees.

In relation to your home, the kinds of events you would need to tell us about within 14 days (28 days if you live overseas or receive remote area allowance) are if:

• you move
• you sell your home
• you rent out part of your home
• you are going to be absent from your home for more than 12 months.

If you have sold your home or have temporarily vacated your lost or damaged home and the proceeds that you received from the home sale or home insurance have been exempted, the kinds of events you would need to tell us about within 14 days (28 days if you live overseas or receive remote area allowance) are if:

• your intentions to use the proceeds to buy or build a new home have changed
• you have bought or built a new home
• your intentions to use the proceeds to repair or rebuild your lost or damaged home have changed
• you have repaired or rebuilt your home.

Usually an overpayment of pension or payment will not occur when you have met your obligations. However, sometimes even if you have met your obligations, an overpayment can occur because we have not been able to process the change before the next payday. We do our best to avoid this occurring, but it is not always possible. To provide you with your exact entitlement we are obliged to recover overpayments of pension or payment where they do occur.