How will the sale of my home impact my age pension?

Selling your home can impact your Age Pension in Australia, depending on how you handle the proceeds from the sale. Here’s a breakdown of the key points based on current rules as of 2025:

• Your principal home (and up to 2 hectares) is exempt from the assets test used to determine Age Pension eligibility.
• Once you sell it, the proceeds from the sale can be counted under both the assets test and the income test, unless certain conditions are met.
• If you intend to use the proceeds to buy, build, or renovate a new principal home, the amount you plan to use can be exempt from the assets test for up to 24 months.
• However, the sale proceeds are deemed under the income test which could prove impactful to your Age Pension payment.
• Any extra funds not intended for a new home are subject to full income and asset test assessment.

Long Term Strategies

If you have surplus proceeds following the changeover of your principal home, you may want to consider these strategies to protect your Age Pension.

• Superannuation – if you are a member of a couple where one is an Age Pensioner and the other is not, parking some money in the younger spouse’s name can be beneficial. This is on the basis that superannuation in accumulation phase is not assessed until you reach Age Pension age.  There are restrictions around adding and accessing money from superannuation, therefore this strategy should be discussed with an appropriately qualified financial adviser before making any changes.
• Gifting – you can gift $10,000 per year and a maximum of $30,000 in any rolling 5-year period.  If you exceed these gifting limits in any way, you will be assessed as though you still have the money or asset for five years. 
• Prepaid funeral – prepaid funerals and funeral bonds up to the value of $15,500 are not assessed by Centrelink.  Buying one of these may assist in maintaining your benefit.
• Spend it – your new home may need renovations and maintenance.  Spending money on this or other things such as clothes or a holiday may also be helpful.  However, this is not something we recommend for clients because spending a dollar of your own money won’t result in you receiving a dollar from Centrelink.  Financially speaking, it is much better to preserve your wealth rather than whittle it away and rely on Centrelink.

What You Must Do

• Notify Centrelink when you sell your home.
• Clearly state your intention to use the proceeds for a new home if you haven’t already purchased one.
• Keep records of how the funds are used to ensure compliance with exemption rules.

Would you like help estimating how your specific sale amount might affect your pension under these rules? Please give our office a call on 03 5224 2700.