On the 1st January 2017 there will be a major change regarding the assessment of a former residential for a person entering aged care.
Prior to 1st January 2017 there is an important exemption for income test & asset test for a person entering an aged care facility and receiving an aged pension. This exemption known as an ‘indefinite exemption’ which says that if a person entered an aged care facility and they are still holding their home (and their partner is not living there) and they renting out their home, they will be able to keep their asset test exemption for their home and their rental income will also be exempt from the income test if they are paying the aged care a combination of Refundable Accommodation Deposits and accommodation periodical payments. This will mean that their aged pension will not be affected. This exemption has been in place for many years and was a corner stone for financial planning strategies.
From 1st January 2017 the indefinite exemption is no longer available for people that are entering aged care facilities after that date. If a person is keeping their home & they are going to rent it out, the rent will be counted towards income test immediately & the value of the house will be assessed for asset test after two years. This will more likely affect the person’s ability to receive their aged pension.
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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.