Staying in the current home or purchasing a new home may be a suitable option for many people, particularly those who are still active or at least mobile and able to maintain their own independence.
Downsizing may be attractive if the current home is too large, too costly or too much effort to maintain. However, this does not always release much equity as people often downsize the size but upgrade the quality or location. So you need to decide if this decision is motivated by lifestyle or the desire to access equity.
Before people make a decision to sell or stay, we strongly suggest that they make a list of what is important about their current home and what would be still be important if they move to a new home. Also, list any disadvantages and whether these can be addressed by staying and making changes to the current home.
People who need help to live independently can access home care services – such as the Commonwealth Home Support Program, home care packages or privately purchased in-home care services.
The decision to keep or sell the person’s own home can have important implications for both their Centrelink entitlements and the fees they may incur if moving into residential Aged Care.
The Centrelink issues for a private home can include:
- If the home is sold and the person plans to buy a new home, the sale proceeds which will be used to buy the new home can be exempt from the assets test for up to 12 months. The person remains a homeowner during this period. This allows the person time to purchase a new home without the assets impacting entitlements. This does not apply if the person is moving into residential aged care. The exemption only applies for the assets test, as during this period the earnings on the capital will count under the income test.
- If the home is sold, any surplus sale proceeds after purchasing a new home will count towards the assets test and may impact the income test.
- If the home is retained and the person purchases another home (and moves in), the value of the old home will count towards the assets test as an investment property.
- If the home is retained and the person temporarily vacates the home but does not acquire a new one, the home will remain an exempt asset for up to 12 months. After this time (or earlier if the client notifies Centrelink that the absence is no longer temporary) the home will count towards the assets test.
- If the home is retained and the client vacates to move into a care situation (either with family or friends or permanent residential care) the home will remain an exempt asset if a spouse continues to live there or otherwise for up to two years. After this time, the home may count towards the assets test.
- The assessment of any rent received on the former home will depend on when the person entered residential aged care:
- Before 1 January 2016 – The rent is not assessable for Centrelink if part of the accommodation cost is paid as a Daily Accommodation Payment (DAP). It is also not assessable for means-tested Aged Care fee.
- Between 1 January 2016 and 31 December 2016 – The rent is not assessable for Centrelink if part of the accommodation cost is paid as a Daily Accommodation Payment (DAP). It is assessable for the means-tested Aged Care fee.
- After 31 December 2016 – The rent is assessable for both Centrelink and the means-tested Aged Care fee.