Real estate assets

Real estate assets include houses, units, vacant land, holiday homes or shacks, regardless of whether you rent it out or not.

About real estate assets

The value of any real estate, apart from your principal home, is included in the assets test. To be exempt from the assets test, your principal home and adjacent land, up to 2 hectares, must be on a single title block and the land must not be used primarily for commercial purposes. We will assess any other property, or part of your home over 2 hectares, as part of your assets. In some cases rural customers and primary producers may have all of the land on the same title as the principal home exempt from the assets test.

If you use any portion of your home buildings exclusively for business purposes, the portion used will be counted as part of your assets under the assets test.

If you leave your principal home and enter a care situation, it may affect your income support payment. Read more about aged care means test assessments.

Real estate values

The value of real estate changes over time. It is important to keep us up to date with the current value of your real estate to ensure you get the right payment. You should tell us of any changes to your real estate including the:

  • amount of any mortgage on the property
  • percentage of the property that you own, including if you have sold it, and
  • value of the property

We may arrange a valuation of your real estate at no cost to you. This can be different to the valuations used by state and local governments. They don't generally reflect the current market value of the property and buildings. We make an allowance for any loan amount you have owing on that property and only take into account your ownership percentage of the property. We apply an indexation amount each year to the value of your real estate to keep the value current and ensure you are receiving the correct rate of payment.

If the assessment of your real estate puts you in severe financial hardship, you can make a claim for consideration under our Asset Hardship provisions. If you are of age pension age, you can also apply for a loan under the Pension Loans Scheme.

We will notify you if the valuation of your property affects your payment. You will not have to pay back any money because of a change in the valuation, unless you have done something to improve the value, for example you add a pool, and don't tell us. If you don't agree with the value we put on your real estate asset, you can ask for a review of the decision.

We verify property ownership against land title information from state and territory governments. We will contact you if our records do not match. If you own more property than our records show, this may result in you or your partner’s payment stopping or reducing. You or your partner may have to pay back money. If you do not agree with the ownership finding, you can ask for a review of the decision.

We will not disclose your information to state and territory governments.

Life interest

If you transfer an asset to another person but keep an interest in the asset, a life interest is created. The will of a deceased person can also create a life interest.

The person with the life interest has a right to income from, or use of, an asset for their life or until a specified event occurs, such as leaving a house. The person who has legal ownership of the asset that someone else has a life interest in holds a remainder interest only. The legal owner has use and benefit of an asset only when the life interest stops. A person may have legal ownership of an asset, but if another person has a life interest, we will only assess the remainder interest.

Life interest in your home

You may have a right to the use of a home for life, usually acquired from a deceased estate. Where you have a life interest in the place you live in, we exempt the value of that interest as the principal home and we consider you to be a homeowner.

If you transfer assets or money for a right to live in a property another person owns, we may assess you under the granny flat rules.

Assessing life interests

We assess a life interest based on how the life interest was created.

We assess the actuarial value of your life interest if you or your partner create it or by the death of your partner. No asset value is assessable where you or your partner didn't create the life interest.

Disposing of a life interest

If you surrender your life interest, we may assess this as a gift. We will obtain an actuarial valuation to determine the value of the life interest you're giving up. The actuarial value will be the value of the gift that we assess as a deprived asset. We will then add it to your other financial assets and it will be subject to the deeming provisions.

Retirement villages

Retirement villages are purpose built units that may accommodate you if you are over 55 years of age. They offer support through self care units. Some villages offer serviced units which means you can have meals, house cleaning, laundry and some personal care provided.

Some complexes have both a retirement village section and an aged care section.

Self care unit

Self care units are usually 1 or 2 bedroom units. They have fully self-contained facilities, including a kitchen. In villages also containing serviced units or residential aged cared accommodation, some offer meals and personal care at an extra cost.

Serviced units

Serviced units generally don't have kitchens. Residents generally eat meals in communal dining rooms. Staff can also deliver meals to rooms. Residents in serviced units may receive help with cleaning and maintenance. Serviced units are not low level aged care facilities unless the facility receives government funding. In that case the residents need to have an Aged Care Assessment Team assessment done that produces a finding that the resident needs low level care.

Entry contributions and ongoing service fees and charges

Before you move into a retirement village, you will generally have to pay an entry fee or entry contribution. The amount you have to pay may vary according to the village you choose and the kind of accommodation you need. In some cases the amount may be equal to the actual purchase price or market value of a unit.

You may also need to pay ongoing fees and charges for services and facilities. If you are living in a self care unit or serviced unit, the retirement village sets the fees.

Some retirement villages also offer rental places to people who:

  • don't own a home,
  • only have a few assets, and
  • are not able to pay an entry contribution

The retirement village sets the rental costs.

Government legislation does not set the fees. So it is important you understand what you are getting in return for the amount you pay.

Entry contribution assessment

The amount of entry contribution you pay affects whether we consider you to be a homeowner and if you are eligible to receive Rent Assistance. We do not include any ongoing fees and charges as part of your entry contribution amount.

We compare the amount of the entry contribution you pay against a figure called the extra allowable amount. This figure is the difference between the non-home owner and the home owner asset test thresholds when you pay the entry contribution. The current extra allowable amount is $200,000. If you pay an entry contribution of more than the extra allowable amount, we consider you to be a homeowner and we don't include your entry contribution under the assets test.

If you pay an entry contribution amount less than the extra allowable amount, we consider you to be a non-home owner. We include your entry contribution under the assets test.

Tenure in retirement villages

The common types of tenure at retirement villages are loans, licences and leaseholds. Other types include strata title and company share. All of the types of tenure protect tenants’ rights, however only some confirm ownership rights. You should seek legal advice before buying into a retirement village.

If you still own your former home

If you aren't in a care situation and you have not sold your former home, we treat it as an asset unless your partner is still living there. If you rent out your former home, we will consider the rent you receive as income.

Lifestyle resorts, caravan or mobile parks and over 55 villages

We consider the following to be retirement villages:

  • lifestyle resorts
  • caravan or mobile parks, and
  • over 55 villages covered by the relevant state or territory retirement village legislations

If you live in one of these places, and you pay the site fees, you may be eligible for Rent Assistance.

The following may seem like a retirement park or village and restrict occupancy to residents over a specified age:

  • caravan or mobile home park
  • transportable home park

These parks may appear to satisfy the basic criteria for determining that they are a retirement village, but they may not be. Only facilities the state retirement village legislation covers are allowable retirement villages.

Page last updated: 6 January 2017