We have had a few clients reading about changes to the Age Pension rules in the near future. So lets talk ‘Aged Pensioners’ and ‘Assessable Assets’ by way of property.
From 1st January, 2017 the government is changing the amount that an aged pensioner can have via the Assessable Asset test, to determine how much pension the government will provide. The good news is the initial threshold is increasing from $286,500 to $375,000 for couples and $202,000 to $250,000 for singles. This is for Home owners.
The family home in which a pensioner lives, is not classed as an Assessable Asset .
The “upper limit” threshold amount in which the test allows a pensioner to receive a part pension and to have assets - currently is $779,000. This will reduce to 547,000 for single pensioners and $1,163,000 to $823,000 for a couple. Once this amount is met, Centrelink is no longer providing pension assistance. These decreases will impact many aged pensioners and possibly many may not be fully aware that the deadline is near.
This has some advisers recommending to the pensioners to update the family home which is seen as exempt from the Assessable Asset test. While this sounds logical, there are many things to be considered before committing to upgrading, renovating or selling and buying a new home.
To sell and buy a home, there are fees such as Legal fees and agent’s commission that would need to be accounted for as well as every-day bills that may increase due to having a larger home, using more electricity to cool your larger home, possible larger rates bill, not to mention other possible fees such as body corporate.
When these extra costs are taken into account, it could leave a pensioner with even less available funds.
Therefore making changes could potentially find the pensioner in a worse position down the track, so although there could be a slight decrease to an individual’s pension, decreasing one’s assets should be made with clarity rather than changing because of the asset test.
At Sothertons our financial planners review these options carefully to ensure that all scenarios are considered before making rash decisions. Time is running out however, hence you should consider calling us 07 4972 1300 for an appointment.