Kathy wants to know whether selling excess land can stop someone from receiving the pension.
Q. Kathy
A friend of mine owns 38 acres of land and turns 70 in July. He moved onto the property in 2004 and agists the land to a dairy farmer for $100 per week. He also has a second house on the property and receives $250 per week for that. The house that he lives in is very run down and is over 100 years old.
He cannot subdivide because of the council rules but he is allowed to sell a portion of the land to the farmer that agists the land. If he does this, he will be left with between three to five acres. After expenses, he should be left with about $160,000 profit from the sale of the property, which he would like to put into fixing up his old house.
Will he still qualify for the pension if he sold the land and fixed up his house?
Read more: How does selling the family home affect the Age Pension?
A. It sounds like your friend is receiving the pension, so if he sells the land and invests it into his current residence, not only will he maintain his pension payments, if he is receiving a part pension, he may find that the rate of his pension increases.
The remaining land that he holds after the sale of the property will be under the two-hectare limit, which Centrelink considers exempt from the assets test, while he will also be forgoing some of the income that he will have reported to Centrelink.
Read more: What is the best way to deal with an inheritance?
If your friend is not receiving the Age Pension because he is failing the income test, selling his land and investing it into his primary residence may now make him eligible to receive the pension.
This is because he will reduce the level of income he receives while any money spent improving his primary residence is exempt from the assets test.
Indeed, depending on the level of income and assets your friend has at his disposal, he may be able to sell the excess land and not spend all of the money on home improvements and still qualify for a pension payment.
Read more: How is our pension assessed if we add more land?
Have you ever had to sell excess land on your property? Did it change your pension payments? Did you know that any improvements you make to your primary residence are exempt from the assets test?
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