What happens to the family home when moving into permanent aged care?

This question is asked by 90% of clients I see, who are looking at making a move to permanent aged care themselves, or for a loved one.  Depending on a clients’ circumstances, the home may be assessed at a capped value, its true value or, exempt entirely.   

It is a common misconception that people are forced to sell their homes to fund a move to permanent aged care.  Depending on financial assets outside the family home, assets could be structured to cover the costs without accessing the home equity.  Where there are limited other assets available, it makes financial sense to sell the property to cover lump sum and ongoing aged care fees.   

If the value of the home exceeds the current Home Exemption Cap, the home will be counted at this capped amount, regardless of the true value.  The Home Exemption Cap is currently set at $169,079.20 (as at 20 September 2019), increasing slightly with CPI each quarter.  This capped value will apply to both members of a couple moving into aged care.     

If the home has a true value of less than the Home Exemption Cap of $169,079.20, the true value of the property will be assessed. 

Where you are a member of a couple, or have someone living with you in the property, the home may be exempt from the aged care assessment.  For the property to be exempt, the home must be occupied by a ‘Protected Person’ at the time of entry to permanent care.  A ‘Protected Person’ includes;  

  • Spouse; 
  • A dependent child; 
  • A carer who has been living with you in the property for the previous 2 years, and is eligible to receive a means tested payment from Centrelink or DVA; or 
  • A close relative who had been living with you in the property for the previous 5 years, and is eligible to receive a means tested payment from Centrelink or DVA.   

If the Protected Person leaves the home, or loses their means tested payment from Centrelink or DVA, the home will no longer be an exempt asset.    

When the home is sold, the capped value no longer applies, and full sale proceeds will be assessed.   

We believe it is imperative to obtain financial advice prior to making any financial decisions on the home to ensure you are aware of the aged care assessments, and the Centrelink/DVA implications.  

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