Homeowner at Centrelink and DVA

By Christine Hopper

Avid readers of Commonwealth Pension means testing charts notice that the Asset Test Allowances have different amounts for ‘homeowners’ and ‘non-homeowners’. So who is a homeowner at Centrelink and DVA?

Homeowner Suburban Examples

Mary still owns the family home situated well inside a standard block in suburbia. Mary is a ‘homeowner’ for the purposes of the means testing for an Age Pension or DVA Income Support Supplement for a War Widow. But if Mary is away from her home for two years then she could lose her home owner status.

Sue owns a strata title apartment in a four-storey 20-apartment complex on Beach Road. Sue is a ‘homeowner’ for Centrelink and DVA Pension means testing purposes.

Homeowners in transition

Joe has sold his former home but has not yet bought a new home. How does Centrelink treat the money he received from the sale while he chooses his new home?

For the first 12 months, DVA and Centrelink will not count the house proceeds for the purposes of the Asset Test but the money will be included in Joe’s financial assets for the purposes of the Income Test for DVA and Centrelink Pension means testing. If Joe then buys a block of land to build a new home, the home site would not count as an Asset for the initial 12 months.

Kim sold the family home for a substantial sum and used only part of the money to buy into a retirement village. Is Kim still a ‘homeowner’? Yes, but if the amount Kim paid to the retirement village as an ‘ingoing payment’ is less than $139,500 Kim might be better off as a ‘non-homeowner’ at Centrelink/DVA and count the retirement village unit as an asset.

When home is on the farm

Bob was injured and now receives the Disability Support Pension because he cannot continue to work his farm. Bob is a ‘homeowner’ but does living in the farmhouse mean that the whole farm is treated as his ‘home’ for the Centrelink Pension means testing?

No, the farmhouse and only a small part of the surrounding land are treated as Bob’s home. The Principal Residence exemption is for a maximum of 2 hectares on the same title as the farmhouse. The remainder of the land is an asset for Centrelink and DVA Service Pension means testing.

Farm home exemptions for long attachment to the farmland

Peter retired from farming at age 65 years and continues to live in the farmhouse. Peter’s only long periods away from the farm were for boarding school and later National Service.

At age 30, Peter inherited the main farm from his parents and later bought some more land nearby. Peter’s nephews now work the farm and pay Peter part of the farm income as ‘rent’ for the use of his land.

Since 2007, Peter has been able to claim the farmhouse and the farmland on that title as his Principal Residence, that is, his home for Centrelink Age Pension purposes. His share of the farm income counts for the Centrelink Age Pension Income Test. Only the farmland that Peter bought is on a different title from the farmhouse lot, so the land that Peter bought must be counted as an asset for the Centrelink Age Pension Asset Test.

When retirees are blessed with more than one house

Alan and Anne own both a beach house and a townhouse. A couple are only allowed to have one Principal Residence for DVA and Centrelink purposes. Careful attention to documentation and assessment as to where they actually stay overnight could determine which of these houses is their Principal Residence. The second house would be counted as an asset for Centrelink and DVA Pension means testing purposes.

If the property with the higher Capital Improved Value is counted as their Principal Residence then their assessed assets for the Pension means testing would be lower than if the less valuable house were counted as their Principal Residence.

Alan and Anne must choose carefully which house is their place of residence. Centrelink and DVA might not allow more than one swap of house as the Principal Residence.

If you would like further confidential, independent and professional advice about Centrelink, DVA pensions, lifestyle or financial issues please contact Christine Hopper (03) 9808 0338.

Financial Care Services – call (03) 9808 0338
Disclaimer: The information contained in this website is of a general nature only and does not constitute “financial advice”. You should obtain your own personal financial advice before investing any money or moving in to any retirement village, lifestyle community or aged care facility. Financial Care Services is licensed to provide financial advice to individual clients based on their personal situations.