Information based on current fees and charges as at 20 March 2023.
Please note, the information and strategies contained in this article are intended as general advice only, and while every care is taken, we make no representations as to the accuracy or completeness of the contents. We have not considered your personal circumstances when developing these strategies. We recommend that you seek personal advice to ensure these strategies are suitable for you.
When you enter care, you are not forced to sell your home. However, depending on the assessment for both Aged Care and age pension, if you retain the home and leave it vacant, Centrelink Age Care and age pension will assess the value accordingly (see “What happens to my home should permanent care be required?”).
If you choose to retain your home, it is important to ensure that you can still meet your ongoing costs. So, what can you do with your home?
Renting the property is one option to consider. Renting it out can provide additional cash flow and potentially help with retaining the home. However, there are some impacts to consider when renting out a property while in Aged Care. The net income (rent) will be means-tested by Centrelink as part of your assessment. This will likely result in a higher Means Tested Fee for Aged Care and a lower Centrelink age pension entitlement under the income test. Therefore, the overall benefit of the rental income to your finances may be decreased. Additionally, you should consider the costs associated with renting out the property, such as maintenance, repairs, agent fees, management fees, and insurance.
Selling the home is another option to meet your ongoing costs and care needs. While it may not be everyone’s preferred choice, it can have its advantages. When the home is retained, it is assessed for aged care purposes up to the home exemption cap, which is currently $193,219.20 per person as of March 20, 2023. However, when you sell the home, the full value received will be counted as an asset for Aged Care purposes.
Selling the home can have several impacts, including:
- The full net value received from the sale of the home is counted towards the Means Tested Fee, compared to the capped value that is counted while the home is retained.
- Payment towards the Refundable Accommodation Deposit (RAD) can be made, which can lower or eliminate the ongoing Daily Accommodation Payments.
- Residual funds not paid towards the RAD are counted in the Centrelink Age Pension assessment.
- The home is no longer considered an asset.
While selling the home may increase the Means Tested Fee, it can help lower the overall fees by ceasing the Daily Accommodation Payments and providing more flexibility in managing assets moving forward. Selling the home may also allow you to pay the RAD and stop interest payments. Any residual funds can be used to assist with future expenses. On the other hand, retaining the home may limit access to funds since you can’t sell off parts of the property if you need more funds.