I am retired and approaching eligible aged-pension age and wanted to ask how assets like my residential property (that i live in) and investment property (that my son rents in) will be considered in the asset test for centrelink aged pension payment.
appreciate any advice and experience you might have.
My tip: Do it now
Ok s̶o̶n̶
capital gains tax
stamp duty
Still a cheap house if their son buys it.
Might have been better off being in a family trust…
@jv: Not really Centrelink has questions on this in their application forms, so it’s not a simple way to get out of it.
@jv: Still need to pay CGTs and stamp duty to get it into a corproate trust for actual accounting purposes…
Holding something as trustee for your son, like this…while possible is a long bow to draw for centrelink purposes.
Yes that is correct but Centrelink is now checking up to 7 years.
That seems incorrect -
If you gift over the value of the gifting free areas we’ll do both of these:
count the excess in your assets test
apply deeming and include it in your income test.
This applies for 5 years from the date you make the gift.
No one cares more about your financial future than you.
Spend some time looking for the answers you require. You will get mixed results here
If only the federal government had a website with all of this information.
Like a lot of information, it's there if you look for it but if you don't know exactly what you're looking for then it's impossible to find. At least if someone is asking on a forum like this they'll get a level of information that enables them to tailor their search to find something appropriate to them. Being a snarky smart arse because you know something that someone else doesn't might boost your ego a bit, but you look like a dick.
That makes sense. Cheers
I head from someone if i had transferred / gifted my properties to my son
hope you're prepared for the CGT event thats going to raise also
Search term is Granny Flat Interests You can't hide assets from Centrelink to get more pension entitlements.
Granny flat arrangement is only helpful for your ppor if I remember correctly.
Ie gift the main house to child and the parents can live in one of the rooms. No need to build a granny flat "structure" for the arrangement to work. But still have to pay stamp duty. Evaluation needs to be professionally assessed too, not some random figure you pull out from the internet.
Granny Flat Interests covers off people like OP giving away their homes to dependents then continuing to live in them rent-free.
You'll have too many assets to get the pension. Popular options are to sell the investment property and use the money to buy a bigger house to live in (you can have a spare bedroom for each hobby, plus an extra one to store the Christmas tree in), or hide the investment property by putting it in a trust.
You'll have too many assets to get the pension. Maybe, maybe not. OP hasn't mentioned the value of the property so you can't jump to that conclusion.
hide the investment property by putting it in a trust. You can't just put it in a trust and then Centrelink will not assess it. CGT and Stamp Duty will still apply. No different to transferring it into son's name.
Correct. They should have done this earlier, now they'll have to wait.
Not just that, Centrelink will want some forms filled out on the trust ie. who its controlled by, if you transferred assets into it, etc. And if you do control it in any way, then Centrelink will attribute the income/assets of the trust to you.
https://www.servicesaustralia.gov.au/private-trusts-and-comp…
Its not as simple as "hide the investment property by putting it in a trust"
Correct.
You can put it into a trust and then relinquishing control of the trust. However the gifting/deprivation of assets provision will still apply.
You may as well transfer to the son (pay CGT/Stamp Duty) and then wait 5 years. A trust won't solve this issue.
I am retired and approaching eligible aged-pension age and wanted to ask how assets like my residential property (that i live in) and investment property (that my son rents in) will be considered in the asset test for centrelink aged pension payment.
All the limits are listed on the website. As you own a IP, highly doubt you'll get a pension. But hey, a pension is for people without money right? You own your own home and a IP!
I head from someone if i had transferred / gifted my properties to my son within 5 years before applying for aged-pension, then they won;t be counted in the asset test. is that try?
There are rules around gifting as well.
Stop being a boomer and trying to scam the system. You have super + IP. Be self funded.
Where have they inferred they are going to scam the system.
You can legally gift property/assets that after 5 years are then excluded from the asset test (should you survive that long). Even Centrelink advises this.
An IP affects assets for pension by reducing the pension by $1 each pay period for each $1k of assets over an annually defined limit.
And the limit is decided by martial status. And if course the value of the IP and any other assets like caravan, car, shares, bank deposits, and superannuation.
Asking to understand what you are entitled to isn’t scamming.
Where have they inferred they are going to scam the system.
LOL If you own a house and then plan on gifting that 'house' to your son just so you can claim the pension, then that is scamming the system.
Asking to understand what you are entitled to isn’t scamming.
Understanding yes, shuffling money and asset around to family members so you can claim the pension is though.
No its not, when the system says its permitted. Scamming is when you do something when its not allowed or at least not in the "intent".
However its listed on their website.
From Services Australia.
You can choose to give away any amount and as many gifts as you like. If the total value of your gifts is more than the value of the gifting free area, your payment may be affected.
If you gift over the value of the gifting free areas we’ll do both of these:
count the excess in your assets test
apply deeming and include it in your income test.
This applies for 5 years from the date you make the gift.
Which would count for the asset test for unemployed benefits - except of course someone would have to be unemployed for 5 years (and know they will still be), to see the benefit from that.
BTW definition of scamming. - which is what you are saying it is.
to trick someone into giving you money or giving you some advantage, in a dishonest and often illegal way
Scamming is when you do something when its not allowed or at least not in the "intent".
Agree, the 'intent' behind this transfer is to gain something the OP wouldn't otherwise be entitled to.
You can choose to give away any amount and as many gifts as you like
Crazy that you think gift giving a house is a 'normal' thing to do.
Working within the rules is not wrong. You dont know their contribution to society or their hardships in life.
Financially there are many people worse off than you as well. Will you take a big Financial hit?
I dont mean the bits we all give to charities but a big hit.
You dont know their contribution to society or their hardships in life.
Oh yes, the hardships of owning two houses…..
Will you take a big Financial hit?
The only Financial hit in retirement is not being self funding and then having to live off the gov allowance.
Don't
Ask
For
Financial
Advice
On
The
Internet.
It's for porn and bargains. Nothing else.
Not to mention there's advice above which is clearly fraud which federal agencies deal with daily. Either contact the relevant department and ask your questions, or get some financial planning advice from a professional.
Congratulations, you can see the light!
Imagine having 2 properties in Australia and still trying to scam taxpayers
There is land tax to screw you anyway!
Fook me - don't get me started on land tax! Actually I'm revved now. Last year $625 on a block that building work had commenced on. This year $1800. An almost 300% increase!!! Fooking government always punishing the hardworkers that try to get ahead!!
Thank Dan and his comrades!!
@payless69: Maybe the ones that "voted him and or his party" should pay the COVID levy! I sure as fook wasn't able to stay home and collect $700 - was amazing and so privileged to be classed an essential worker and earn less than those at home!!!!
God bless the Pensioners and their ability to leverage their pensions even though they have millions in assets.
Intergenerational wealth will be the downfall of Australia.
Personally i think we should go harder in means testing the pension. The future generations aren't going to get access to it so why should they subsidise those with investment properties.
Perhaps you might do a simple Google before you spout nonsense.
https://www.servicesaustralia.gov.au/assets-test-for-age-pen…
https://www.servicesaustralia.gov.au/income-test-for-age-pen…
It’s the same mindless intergenerational attacks that Ozbargain is starting to endorse.
Stupid wild statements based on socialist rhetoric. If you have a million in assets you don’t get the pension. A couple qualifies at a few dollars over (and then it’s a pension of a few dollars only - not the full pension).
So two people with COMBINED assets get a few dollars. To me that’s not a millionaire. Thats two half millionaires. Assets also include car and household furniture. So unless they don’t have these their other assets will always have to be under $1million as well.
As for Drakesy with Millions - thats plain BS.
But hey let’s not have truth get in the way of ideological crap.
But its the attitude that seniors would rather preserve their pension than live off their assets/super/prepare for their future knowing the government will save them.
Know of family friends who bought the biggest house they could, emptying their savings and liquidity knowing that the pension will supplement it.
Then they get to complain that the pension isn't enough.
@Drakesy: Thanks for the vote..
Using a persons “attitude” to now excuse your ignorance on the assets required. Very simple. And in the case of the OP. You have no idea what the IP is worth neither do I. It could be as low as $200k. You just got your ideological rant going.
Thats why Centrelink is employed to assess and decide what is permitted and how much. Just like there is an asset test for unemployment benefits.
Many other pensions/payments are impacted by these asset tests with exactly the same cutoff limits
You were wrong in your argument. Fess up. 😀
@RockyRaccoon: Is getting a pension while sitting on $1 million in assets doing it tough though?
Meanwhile the next generation has next to no hope of getting a property while they pay for the pensions which is the biggest load on the social system?
Maybe we should take a leaf out of the french and protest every second week.
@Drakesy: Again the rhetoric - doing it "tough"
A $1million in assets = $0 in pension. A couple with $1million in assets will get $43 a fortnight. if they have 12000 more they get nothing.
A Single "millionaire" gets nothing if their assets are over $674K/ Of course they are sort of a millionaire arent they?
Facts
@RockyRaccoon: PPOR is generally not included in the assets test, hence putting their money into PPOR.
@Miss B: Miss B
It is in some respects as I mentioned elsewhere in the posts. You own a home, then the threshold for reduction thru having assets is reduced.
So a PPOR does impact you ability to get a pension, not fully but in effect its around $250K worth of impact.
@RockyRaccoon: Sure, even if the house is worth millions. So as they said you can have millions of dollars in assets and still get the full age pension.
@Miss B: I am not disagreeing, just like the same can get parenting allowance and other Centrelink benefits as they don’t require your PPOR to be included.
Btw I am only in this and other posts just stating what is and isn’t allowed, and what limits are real, rather than just emotional numbers that people throw around. A pensioner with a $3million home as others use as an example is a very limited one. The rates and insurance for example would probably eat most of the pension.
Now they may have other income, but that also then gets hit with income assessment limits. Of course hidden income and assets overcome these issues. But even adjusting the limits doesn’t stop fraud, only policing will do that.
Many comrades are inventing new tricks to what they aim at equalise wealth. In reality all they do is wipe out the middle class.
Reading history books proves that none of them comrades have succeeded other than using brute force such as weapons of mass destruction and genocide.
When Hitler was jealous of the wealth of the British he was powerless other than mass blaming and starting a secret genocide. First thing they did is killing a few hundred thousand weaker humans using carbon monoxide.
Then blame shifting until the end end leaving life with suicide.
Have humans ever learned something since?
The short answer is that your thinking is financially unsound.
Your investment property means you're likely to fail the asset test (https://www.servicesaustralia.gov.au/assets-test-for-age-pen…).
Even if you liquidate your investment property, you'll then pay a ton in capital gains tax and stamp duty, which are calculated at the market value of the property at the time of disposal (so no getting around it by gifting the property to your son). The CGT and stamp duty alone (likely to be hundreds of thousands of dollars, depending on how long ago you bought), will take you ages to claw back via a measly pension (about $500pw for a single person).
In any event, the pension is meant for those in need, and not for multiple property owners who have retired early, want to game the system to get on the public teat, and still have a grown son suckling on their teat.
Why stamp duty, he's not buying another house? Unless he's paying that for the son too
Why would you liquidate your IP?
Liquidate your PPOR and move into your soon to be former IP. No stamp duty if you're selling it's the buyers problem.
Although how would you offload all the money you have as that would also be part of the asset rest I would presume
Jim vs Jim vs Jim.
Would be a good name for a legal firm…
Jim, Jim and Jim
We'll get you out of a jam
Edit: now we just need another Sam to upvote lol
Need to all work at Dunder Mifflin.
Also need Asian Jim to make an appearance once in a while.
TIL there are people who don't use dark mode on ozbargain. Crazy.
Jimothy is always having a go at me for that. I'll say it one more time…
I use dark mode everywhere except ozbargain because it looks shit.
How did you get dark mode? I've looked at ozb settings and couldn't find anything
It’s in the My Account drop down, just above Log Out
investment property
Doesn't sound like you need the aged pension
Really
Like saying have two legs so doesnt need a car.
I hope for your sake you get more data before making any crucial decisons in your life.
At least you did say IP not "Asset"
If you have an investment property you're demonstrating that you have more money to gamble than live off, pension is there to keep you living day to day, it isn't there to subsidise your investments.
RU really OK?
You keep going back to that horrible word "Investment property" - That can only be worth $200K, and you assume they have other income as well?
And what the F do you mean by saying its "subsidises" their investments. Or do you mean it supplements their income from investment? You throw this rhetoric around because it sounds "rich" when it may not be.
You know fully mandated superannuation was only introduced in the 90's. So someone retiring now only had 30 years to accumulate super vs other who will have 50 when they retire. And started at 4% rising after 10 years to 9%. So a "boomer" retiring now would have had far less contibutions that someone of today when they retire.
Thats what Super is all about. Its meant to replace the pension, for most workers. But that assumes they have paid in for their whole working life at todays rates. That will come, but coming isnt the same as here now.
That can only be worth $200K,
It can also be worth $2M. That's why I said "sound like" instead of "you don't"
Aged pension is a privilege and not a right. Just because you reach the age to qualify for one, doesn't mean you should.
@Duckie2hh: Correct, thats why I called you out. Its NOT investment property. Its Million PLUS investment property.
You are agreeing with me by now qualifying what you said, which was my point all along.
A generalised statement trying to make a specific point is pointless.
If someone claimed "sounds Like" you should get the pension, that also would be wrong without knowing the value. Thats why Centrelink has the rules it does.
Aged pension should be assessed on total assets instead of just investments.
Do you understand that already to qualify for a pension while owning a home, means that your asset limit is lower than for those not owning a home, so effectively some of the home's value is included in a pensioners assets.
@Duckie2hh: Why not tell that to one sitting on a $100k Home in outback QLD. Who loses more than the value of that home.
Like everything you have with a system there are anomalies/exceptions.
Not everything in life can be solved with simple solutions.
@RockyRaccoon: I am just saying that PPOR should be counted towards eligibility of the age pension. So by your logic of the $100k homeowner in outback QLD, would still qualify for the full pension.
Reference: https://www.servicesaustralia.gov.au/assets-test-for-age-pen…
Not everything in life can be solved with simple solutions
Seems pretty simple to me.
@Duckie2hh: Thats where you are wrong. If you are a householder then the asset test ithreshold is lower.
So someone who has a cheap house, is still a householder, and gets cut off from the pension with assets lower by roughly $250k
Eg single householder loses progressively more of their of the pension when assets exceed $301k, while those without house start losing after it exceeds $543k.
It like you constantly want to judge pension eligibility without knowing much about it. It’s not ”simple”. Also there is an alternative test being income tested. And Centrelink uses the one that is most beneficial to Centrelink.
Also Assets aren’t just homes or investment property, it’s fridges, furniture, car, dinghy, caravan, trailer, superannuation, loans, shares, cash, and many more.
I’m not defending the pension limits, just saying don’t complain or judge without understanding the current situation. Then you can make a correct judgement based on facts.
Thats where you are wrong
Don't think so. If you bothered going to the link that I left, you would see how 'your' $100k QLD homeowner would still get the pension and someone with a $3M home in Toorak also gets the pension (even though they shouldn't).
If you are a householder then the asset test ithreshold is lower
I never said otherwise.
It like you constantly want to judge pension eligibility without knowing much about it.
Then you can make a correct judgement based on facts.
What was your point again?
@Duckie2hh: My Point was
Originally that other assets were included to some extent, NOT "just" investments. I wasnt arguing for or aginst them. Pointing out your call like others here isnt black and white in or out.
To this you then started again to make other statements like using an $3M home. To which I was also pointing out that Centrelink doesnt use the value of the home, so currently someone with a $100K home is unfairly treated because that asset is in effect valued as $250K, while the $3M home is also valued at the same $250K
As this can be confusing I tried to explain it, best I could.
Again . Someone in $100K home can start losing the pension as the LINK (which we were both referring to) shows when they have more than $301K in assets - I defined those earlier.
Someone without a home can have $543K (My 250K is actually 242K if we want to be 100%)
So a person with the $100K home would get more pension by selling their home and putting the proceeds into a bank, if their assets exceeded $301K
And I dont think thats fair on someone obviously not as well off as someone with $3million house
One other aspect to consider is that these same asset tests apply to many other government payments and PPOR isnt included in assessing those.
Maybe using some indexed median/average house value would be fairer. But then do we allow for regional differences……
appreciate any advice and experience you might have.
Yeah, don't take our taxpayers money when you own your PPOR and have an investment property.
You don't need a pension if you have these things.
JFC. Classic boomer mentality. The next generations are never going to be able to afford any sort of house and you're trying to wring them for every penny by gaming the system when you had it good.
Can't wait for the "but I worked hard for this" reply - as if no-one else is working hard.
Wait for the… "I deserve it" comment
Well he's probably paid more taxes than the rest of us, so seems reasonable to me
Owns two houses and wants the pension 😂
Owning two houses is one thing, having a no cash flow is another. I know pensioners who have valuable houses yet they don't want to sell them (downgrade) so they live in poverty.
Having a house you've had your whole life and not wanting to leave it is a bit different to having two houses and wanting to get the pension.
Just a couple of thoughts to consider:
CGT is always going to be payable anyway - even at death it passes to the inheriter. But there are many $1000s to be saved by being a low income eaner at the time. (I wonder if you could leave it jointly to a heap of grandchildren, and they sell it before any start working so each get $18,200 tax free??)
If IP > the asset limit for pension, you could use it to finance your retirement instead of pension. Refinance it with an offset account just before you stop working. You should have a heap of equity in the offset to live off.Just make sure you'll have enough income after the loan is paid off if you intend living > 30 years in retirement.
Why not call the Centrelink Financial Services line?
They will be neutral and offer you free advice.
Fis officers don't give any advice, let alone free advice.
How do you own two houses etc when you are too silly to ask experts instead of random on a bargain site?
I found an article a while ago which clearly outlined legal ways to decrease your assets to qualify for a pension. It was found by googling something like "preparing your assets for retirement".
Your PPOR is not included in the assets tests no matter what it's value. It's the other house that is your problem and the rental income it derives. So one of the suggestions was to use money to Renovate, upgrade your house etc. It would have probably been better to have done this before now: a dual living property. Even if you sell your investment property, you have cash to be dispersed.
Some of the ways I remember are prepaid funerals, spend money on the bucket list holidays which you pre-book now. One thing I did find interesting was an Annual Annuity agreement with an insurance company (ie they pay you $x each year. Remember though that this counts as annual income so the amount has to be within the asset test income allowance allowed.) Another I recall as being acceptable was a trust specifically for the care needs of a person or persons for whom you have an obligation to care for. There were others, but I don't recall because they didn't seem relevant to my situation.
I would also say it is not impossible. My Uncle and his wife had several investment properties as well as their own house. They were self-funded but then he got to a point where she had dementia and was needing to go into a facility and he had Parkinson's disease and he went into the same facility as all the stress had deteriorated his own condition. With some good financial advice, they qualified for federal government subsidy in the aged care facility and a full pension. So it certainly is possible. Perhaps part of it was to utilise a trust to provide for their costs of care. I know he was able to get around the gifting somehow to give a property to the stepdaughter. She had been living in it for years.
Interesting discussion. It raised a question for me.
If a person owns one house which they live in AND they decide to rent out some rooms I take it that:
a) the rental income is used in assessing/calculating pension payments
b) the house is still fully excluded from assets as a PPOR? [Yes, that's really the question]
a) applies to those who choose to declare their rental income ;)
So if you have an IP you'll never get the pension? Sounds like that supports Nepo babies. Also, what about PSS? Bit unfair you can't get Aged Pension just because you worked hard.
Welcome to STRAYA!!!! The land of opportunity- except for those who slog it out year after year and are bent over and given it by government!!!
Boomers will be the downfall of Australia, bleeding is taxpayers dry while gifting family members property and travelling around Aus in their 100k LandCruiser with 100k portaloo behind it.
Make an appointment with Centrelink financial information service. They will give you a detailed, written report outlining your options, including tax implications, gifting rules & future Centrelink entitlement. Very helpful, no cost or obligation. Their role is to provide you with information so that you can make an informed decision. Private sector financial advisors will probably tell you similar things and charge you for the privilege. Good luck
From what you say, you'll have too many assets to qualify for the aged pension - which is a good thing IMO.
Got multiple hosues, don't want to pay the rightful tax on it and also don't want to sell it on the market, making it more difficult for others to buy
Gotta love a thread asking for advice on how to scam the tax system and let the burden become everyone else's problem 👍
I work in Aged Care as a Manager for 5+ years now.
Yes that is correct but Centrelink is now checking up to 7 years.
My tip: Do it now (pretend you sold it) so you will all get the benefit from the Gov't otherwise you will use all your resources back to Aged Care.