Real estate assessments for Services Australia can often be misunderstood as it’s assessed differently depending on the payment you’re getting.
It’s important to remember that in most cases the principal home has no income and doesn’t count as an asset, so it doesn’t affect your rate of payment.
When we look at assessable income from real estate, Services Australia does not recognise negative gearing – the tax arrangement where you can offset investment losses against other sources of taxable income.
Making a loss
If a property is making a loss, the assessable income from the property is $0.
If the payment or concession is based on your adjusted taxable income, like Family Tax Benefit, Childcare Subsidy or the Commonwealth Seniors Health Card, then you will need to add any net rental property losses to your taxable income as part of the claim.
For most other payments, Services Australia will look at both the assessable asset and assessable income from real estate.
The value of the asset is the market value – what you would get if you sold it. We assess the value at the time of application and then automatically revalue the property on the anniversary of your claim based on the movement of property prices.
Services Australia can offset the value of real estate with any loans secured against that property. So if you have an investment property with a loan solely or jointly secured against the investment property, then Services Australia is able to reduce the market value by the proportion of the loan held against the property.
As an example, if you have an assessable property valued at $650,000, with a $200,000 mortgage secured against that property alone, then the assessable asset would be $450,000.
If the mortgage used to by the real estate was secured against the family home, then none of it can be used to offset the value of the real estate.
Time share arrangements
Time share arrangements are a form of property ownership where you have a right to use a particular property or properties for your holidays.
You may own a share of one property that gives you access to a particular place for a particular time, or be part of a points system that gives you access to a variety of properties at different times.
Time share arrangements are not treated the same as standard real estate. Services Australia assesses time share arrangements like a managed investment in that the income from the time share is deemed under deeming rates. This means that there will be an assessable income under the deeming rules, whether you earn more or less than those amounts from the time share arrangement.
Services Australia assesses the asset value of a time share as the purchase price. That can be changed if you can provide evidence from recent sales that shows the value has fallen.
If there are any changes to your real estate or timeshare arrangements, you should let us know within 14 days.
Do you have real estate assets? Do they impact your payments? Why not share your experience in the comments section below?
Also read: Guide to granny flats for homeowners
Why does Centrelink not automatically advise when a property is revalued?
I had my pension cancelled because of a revaluation, which was also not advised immediately.