Selling your principal home may affect your Age Pension because the proceeds from the sale could impact the income and assets tests, potentially reducing or cancelling your payments.
Centrelink will also 'deem' (take as a fact) that you are receiving income from the amount of money you have received from the sale of your house. Centrelink will assess the 'deemed income' from the $500,000 until you pay for the new unit.
You can have significant savings before losing your Australian Age Pension, with limits depending on whether you own your home and your relationship status, such as a single homeowner having up to $321,500 in assets for a full pension, while non-homeowners have higher limits, and a part pension is available with even more assets, up to around $700k-$900k before payments stop. The key is that your assessable assets (excluding your primary home) reduce your pension by $3 for every $1,000 over the lower threshold, but you can still get a part pension with much higher assets.
Yes, if you are in receipt of any benefits or payments from Centrelink, you will need to advised them of any changes in your circumstances, including the sale of property. This is because certain changes in assets or income can affect your eligibility for benefits.
What are the Centrelink downsizing rules? On 1 January 2023 significant changes were made to how Centrelink assess the proceeds from your home when you downsize. Under the assets test the proceeds of the sale of your home that you intend to use to purchase or build a new home have an exemption of 2 years.
Impact on the Age Pension or other government benefits
If your home is your principal place of residence, it is not included in the assets test. When you sell your home, the portion of proceeds used to buy, build or renovate another home is exempt from the assets test for up to 12 months.
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The seller must have owned the home and used it as their principal residence for two out of the last five years (up to the date of closing). The two years don't have to be consecutive to qualify. The seller must not have sold a home in the last two years and claimed the capital gains tax exclusion.
You'll need to add half of your profit to your income for the year. Because your profit was $100,000, you'll report $50,000 as a taxable capital gain. Your personal tax rate is then applied to the total amount of income you reported to determine how much tax you owe.
The happiest retirees have an average total monthly income of £1,700. To get at least that much a month, and assuming you retire at 65, you'll need to: Have a pension pot of about £172,500, after you've taken your tax-free cash. Be eligible for the full State Pension, which is currently £11,973 a year.
However, if you gift an asset that Centrelink do not count as an asset e.g., your home then all of the value of the home less than the 1st $10,000 will be counted and you could lose the pension immediately.
Yes, you might still get a small part of a government pension (like Australia's Age Pension) with $1 million in assets, but it depends heavily on your living situation (homeowner/non-homeowner), relationship status, and current pension rules, as $1 million is generally above the cut-off for full pensions, though it's below the maximum limit for a part pension for couples in some scenarios. You'll likely qualify for less or no Age Pension, but you might still get a concession card, which offers utility and other discounts, say sources 2, 3, 6.
If you sell the home, its value will count towards the Age Pension assets test. If you rent out the home, its value may count towards the Age Pension assets and income test, depending on when you moved into aged care.
The main residence exemption is one of the most powerful tools available to Australian property owners. It allows you to avoid capital gains tax on the sale of a property if it has been your principal place of residence (PPOR) for the entire ownership period. To qualify, the property must have been your genuine home.
If you have owned the home for at least two years and lived in it for at least two out of the five years before the sale, you may be eligible for certain tax benefits. This is the “2 out of 5-year rule.” The “2 out of 5-year rule” is a term commonly associated with Section 121 of the Internal Revenue Code.
A common way to defer or reduce your capital gains taxes is to use tax-advantaged accounts. Retirement accounts such as 401(k) plans, and individual retirement accounts offer tax-deferred investment. You don't pay income or capital gains taxes on assets while they remain in the account.
The Six-Month Rule
For this exemption to apply, two conditions must be met. First, the property must have been your primary residence for at least three months within the 12 months before selling it. Secondly, you must not have used the property to make assessable income in any way within the 12 months before selling.
Is my home considered an asset? Your home is not counted as an asset when calculating pension or payment, but it does affect how your pension or payment is assessed under the assets test. If you are a homeowner your asset value limit is lower than someone who does not own their residence.
To get the full Australian Age Pension in late 2025/early 2026, a single homeowner can have up to $321,500 in assets, while a non-homeowner can have $579,500; for couples, these limits are $481,500 (homeowner) and $739,500 (non-homeowner). Assets include savings, investments, and property (excluding your primary home), and exceeding these thresholds reduces your pension, with higher upper limits for receiving a part-pension.
Technically, yes – but there are significant factors to weigh before pursuing this route. While spending down your super may reduce your assessable assets and potentially increase the Age Pension you're eligible for, it's crucial to consider how this could impact your financial security and lifestyle in retirement.
The biggest things that devalue a house are location issues (bad crime, poor schools, noise), major structural/maintenance problems (roof, foundation), outdated kitchens/bathrooms, extreme personalization (bold colors, quirky decor), poor presentation/clutter, and legal issues (unpermitted work, zoning problems). These factors signal future costs and headaches, making buyers hesitant or drastically lowering their offers.
There's no right age to downsize your home. However, people tend to make this decision later in life, as their kids fly the nest and they're moving towards retirement. This is why planning for retirement as early as possible will enable you to explore new possibilities ahead.
If the 5x5 method is as new to you as it was to me, allow me to explain. Coined by Steph of The Secret Slob, this technique requires nothing but a timer and twenty-five free minutes. Pick five rooms or zones and dedicate five minutes per area. In twenty-five minutes, Steph promises a cleaner, less cluttered home.