Downsizing your home and rent assistance

For those on government entitlements like the Age Pension, generally outside of your superannuation – your home is your biggest asset. But what happens to your Age Pension when it comes time to sell your home and downsize? Downsizing doesn’t happen overnight so does your Age Pension get wiped out whilst you are in between houses? Well, in some cases no and here’s why.

The Government will give you for those selling from the 1st of Jan 2023 onwards up to 24 months (provided it is your intention to become a homeowner again) an exemption period where they WON’T asses the asset value of your property up to the amount you intend to purchase another home for. I.e. your current home is worth $2 million and you sell then only plan to purchase for $1.5 million. Only the $1.5 million is exempt NOT the whole $2 million. Noting that the actual asset value will still have an impact on your income test i.e. it will be deemed.

This can be very handy in keeping government entitlements as you might be staying with family for a period of time until your next home is ready – or you might be temporarily renting until you are ready to move in. Now, the rules get very tricky here and it is important to seek specialised advice as in some instances as you will still be classified as a homeowner but for rent assistance purposes you may now not be an ineligible homeowner which means you may be able to claim rent assistance. The current amounts of maximum rent assistance payable sit around the $200 per fortnight mark for a single and a couple (slightly more and less depending on your situation).

I have even in the past had a client who did downsize and was staying in an Airbnb until their next home settled – I was able to assist them in claiming rent assistance through Centrelink (after a bit and back and forth with Centrelink). Planning and actually downsizing has many implications – if you can keep your government entitlements through this period to help out financially and you meet the criteria, then why not.