Blair is considering renting out his stepfather’s house to pay for his aged care accommodation but wants to know what happens to his pension.
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Q. Blair
Just wondering what the go is with renting out my stepfather’s house to help pay for his aged care facility cost? He has just recently entered an aged care facility. I was wondering, if it was rented out to cover some of his costs, how much it would affect his Age Pension?
A. For pension purposes, the home has a two-year asset exemption but any rent will be assessed under the income test, which may affect his Age Pension depending on his current income.
When calculating his assessable income, any rent he receives from his former home will be included as assessable income in the Centrelink income test.
If he is single and receiving a full Age Pension, he can earn up to $178 per fortnight and continue to receive the full Age Pension amount. If he is assessed as a member of a couple, the combined income a couple on the full pension can earn is $316 per fortnight.
Once the fortnightly income limit is exceeded, the pension amount is reduced by 50 cents for every dollar over the limits mentioned above.
If your stepfather’s income per fortnight, once the property is rented out, exceeds $2066.60 per fortnight if he is single, he will no longer receive any pension payment.
People who entered aged care prior to 1 January 2017 are treated differently and their rent can be treated as exempt as different rules applied at the time, but you mentioned he has only recently moved into his aged care facility, so this will not apply in his situation.
When it comes to making decisions around property and aged care, it is always a very good idea to get expert financial advice to ensure you make the right decisions.
Are you or a loved one living in aged care? What did you do with the former home? Did you seek financial advice before making any decisions?
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Related articles:
https://www.yourlifechoices.com.au/aged-care/cost-of-aged-care/costello-proposes-death-tax-for-seniors
https://www.yourlifechoices.com.au/government/centrelink/implications-of-buying-a-second-house
https://www.yourlifechoices.com.au/government/centrelink/how-often-is-deeming-applied
Disclaimer: All content on YourLifeChoices website is of a general nature and has been prepared without taking into account your objectives, financial situation or needs. It has been prepared with due care but no guarantees are provided for ongoing accuracy or relevance. Before making a decision based on this information, you should consider its appropriateness in regard to your own circumstances. You should seek professional advice from a Centrelink Financial Information Services officer, financial planner, lawyer or tax agent in relation to any aspects that affect your financial and legal circumstances.
