Vikki lives on six hectares of land and wants to know if it will be considered under the assets test for eligibility for the Age Pension even though she and her husband can’t farm it or sell it off.
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Vikki: My husband and I are retired and live in our house on six hectares and have been here for three years. My husband is 72 and I am 68.
We cannot subdivide the land under our local council rules and do not do anything with the land.
Will the extra hectares be considered an asset when applying for the pension?
Read: Will a year-long trip hit my pension?
A. Well, like many Centrelink rules, it depends, but unfortunately your particular circumstances mean time is not on your side.
According to Services Australia, usually two hectares of land on the same title as your main home are exempt from the assets test and the rest must be declared.
However, if you are a rural customer the land may exempt if you or your husband meet all of the following:
- have reached Age Pension age
- are getting Age Pension, Carer Payment or Pension Bonus Bereavement Payment or a service pension from the Department of Veterans’ Affairs
- have lived there for the past 20 years in a row
- pass a ‘land use’ test.
The land use test means you need to use the land to make an income, such as running a farming business, leasing the land, or conversely have little to no scope to earn income from the land.
Read: How does Centrelink assess caravans?
Unfortunately, while you meet most of the criteria, as you have only lived there three years, Centrelink will not accept your claim to exempt the remaining four hectares from the assets test.
Services Australia uses current market value to assess your real estate, which can be as simple as looking at the land value. Although, if there is a big differential between what you paid for the property and the land value it will be based on what you paid for the property.
Services Australia indexes the value of residential properties each year to keep up to date. If it can’t index a property, they will arrange to have it done.
As a federal department, Services Australia uses a different formula to local and state governments if you are wondering why the land is valued differently for taxes and rates.
Have you had land declared exempt? What were the circumstances? We’d love to hear your story in the comments section below.
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