This can benefit people who:
- have a former home that has a high market value
- have a former home that will generate sufficient rental income to assist with aged care expenses
- will receive a reduced or cancelled age pension when the former home becomes assessable two years after entering aged care
- Retaining former home for two years after entering aged care may assist with maintaining social security/DVA entitlements as asset value exempt (assessed as homeowner)
- Selling former home two years after entering aged care may assist with meeting expenses – as age pension may reduce due to market value of former home becoming assessable (assessed as non-homeowner)
- Retaining former home for two years after entering aged care may assist in reducing aged care fees – as capped value of former home is assessable (unless occupied by protected person)
Things to be aware of:
- Two years after permanently entering aged care, market value of former home assessable for social security (assessed as a non-homeowner)
- Rental income assessable for social security and aged care fee purposes unless eligible for exemption
- Former home may need repairs/renovation before can be rented
- Rental income may fluctuate i.e. periods where its vacant
- Ongoing costs e.g. real estate agency fees, accounting costs, building and landlord insurance, council rates, water rates, repair costs, land tax (if applicable) etc.
- Rental income assessable for tax purposes. Persons may have to lodge tax return.
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Disclaimer and Warning
The information above is of a general nature only. It should not be used as a source to make financial decisions. It’s also important to note that the legislation and figures related to this topic tend to change regularly and therefore the information above may not reflect the current status. We recommend that if you are looking for advice on this matter, you should contact us.