Should You Keep or Sell Your Home


Article by 

Rachel Lane

A number of people believe that you have to sell your home when you move into aged care.

When asked who will force them to sell, the answer is typically either the government or the aged care home. It’s a myth.

Whether you choose to keep or sell the family home when you move into aged care is up to you. Selling the home may be the right decision, but there are a few things you should think about first.

Let’s start with how the home is assessed to work out how much you can pay for your aged care.

The calculations

For calculating the amount that you can contribute towards your aged care costs, the value of your former home is capped at $178,839 (unless a protected person lives there, in which case it is exempt).
A protected person includes: your partner or dependent child, a carer who is eligible for an Australian Income Support Payment who has been living in the home for at least two years, or a close relative is eligible for an Australian Income Support Payment who has been living in the home for at least five years.

If your home is worth less than the $178,839 cap, then the market value of the home will be used in the assessment. In most cases, the market value will be far greater than the cap. As these special rules only apply to your former home, if you choose to sell, you are increasing the amount of assets and potential income that will be included in the aged care assessment.

50c per dollar above $28,974.40 per year (Single) $28,454.40 per year (member of a couple)
17.5% of assets $52,500 – $178,839.20
1% of assets $178,839.20 – $431,517.60
2% of assets above $431,517.60


  • Half of the combined income and assets are assessed
  • If your calculated amount is $60.74 per day or less, you are considered a low-means resident.
  • If your calculated amount is more than $60.74 per day, you will pay the market price for your accommodation. Your Means Tested Care Fee is the amount above $60.74 per day.
  • There is an annual limit of $29,399.40 that applies to the Means Tested Care Fee.
  • There is a lifetime limit on means-tested fees across Home Care and Residential Aged Care of $70,558.66.
Now let’s look at how Centrelink treat your home for the purpose of calculating your pension.

Just like with the aged care assessment, your home receives special treatment in calculating your Age Pension.

  • Under the pension assets test, the full value of your home is exempt for two years from the date you or your partner leave the home (whichever is later).
  • When the 2-year exemption ends, the home is included in your assessable assets at the market value, but your pension assessment changes from a homeowner to a non-homeowner giving you an asset test threshold and cut-off that is $216,500 higher.

While the asset value of the home receives special treatment for both pension and aged care means testing, it is important to know that if you receive rent from the home it is assessable income for both pension and aged care means tests.

There is special tax treatment too. As a general rule, you can keep the main residence Capital Gains Tax (CGT) exemption on your former home for six years after moving into aged care if the property is rented and potentially beyond this if it does not produce income. Be careful though, as the tax implications for you and those who stand to inherit the home are complex and warrant seeking specialist advice.

So with all these special concessions, why are most people so quick to sell their former home?

Well, typically, the former home represents the majority of wealth for the person entering aged care. Without selling it, they cannot meet their cash flow needs. You see, while you can choose to pay for your aged care accommodation by daily payment, the interest rate is 4.07%p.a. Which means a $500,000 accommodation deposit (RAD) has an equivalent daily payment (DAP) of $20,350p.a. When this is added to the basic daily fee ($54.69 per day/$19,962 p.a), a means-tested care fee and any additional services, you can easily be looking at an annual cost of $50,000 or more.

The bottom line is if you have a home and a small amount of money in the bank, it is easy to jump to the conclusion that you have to sell it.

Typically the former home represents the majority of wealth. But for all of the reasons listed above, as well as the potential impact on your estate planning wishes, it is vital to crunch the numbers. Or you can get a Retirement Living and Aged Care Specialist® adviser to crunch them for you! The treatment of your home is unique from any other asset; once it’s sold, it’s too late.

A list of Retirement Living and Aged Care Specialist® advisers can be found on our website

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  1. Wish I had of found out this information before my brother & sister in-law advised (rushed) them to sell within month of moving into a retirement home.
    Was a very emotional time and I was not prepared for it, and they took advantage of the situation, and to add to the situation they gave away or threw most of their life memories away in the trash!

    1. So sorry to hear this Sandra, that sounds like a very difficult situation. We wish you all the best moving forward.

  2. Good morning
    thankyou for this article. I have a question if i may
    Dad has moved into dementia care and has been rated low means. Mum now unable to look after big house in poor condition and looking to move into a retirement village where she will purchase a unit. How does the house sale affect dads low means rating ? What of the $ from selling house is assessable, is it only half the difference between sale price and cost of new home?
    Mum still needs money to live so is it all excempt until she sells new home and moves into residential care

    1. Hi David,
      Your Dad’s low means resident classification won’t change while he lives in that aged care home, however the amount her can contribute will be recalculate based on the change to his means. Depending on the change to his assets and income their can be a recalculation of his accommodation contribution and he can start paying a means tested care fee. It’s impossible to say what that would be without knowing the numbers and I can’t give you any advice. Let’s say his assessable assets changed by $100,000, his accommodation contribution could change by $17,500 per year. It is definitely worth seeking advice from a specialist adviser to understand the full picture before your Mum makes a move. If you would like me to connect you to a specialist adviser please get in touch on 1300 855 770, happy to help.

    2. Hi David, this is the sort of thing a financial planner will be able to answer for you. Very best wishes, Lucy

  3. Hi David, my dad owns the family home and is the only one on the title. My mum and dad have been married for and lived there for 55 years, neither of them have any other assets or cash.
    Dad has gone into aged care, mum is still in the house but will need to go into aged care.
    What happens to the house?

    1. Hi Alicia,
      When it comes to aged care couples are assessed 50/50 on their assets and income regardless of who legally owns them. The house will not be included in your Dad’s assessable assets as your mother is still living there so it is exempt. The means assessment will look at his half of the assets and income outside the home. I hope this helps.
      If you would like to speak with one of our specialist advisers I would be happy to connect you.

  4. My mum need to age care home soon,she own the unit wroth 600000,does she have to sell unit,so all does she have to pay the age care

    1. Hi Jing,
      Firstly, if a protected person such as a spouse or in some cases a carer or close relative lives in the home it is exempt. If the home is assessed it is only included up to a capped value of $197,735.
      You don’t have to pay the accommodation cost as a lump sum, you can pay it by daily payment or by a combination of lump sum and daily payment. It is worth seeking advice before you sell the home and pay the RAD as it can affect the cost of aged care as well as pension entitlements, cash flow and estate planning. There is a list of specialist advisers on our website
      Hope this helps.

  5. Hi. My mother has her own home as my father has passed away. Does this mean she won’t have to sell her home or use it to move into an assisted living home in Qld? She’s just turned 79 but still doing well. I ask as her health may change. My siblings are trying to get her to sign the house over to one of them so we won’t lose the house if she has to go into a home. I’d like the house to stay in her name. What’s the best option?

    1. Hi Veronica,
      To work out the best option you need financial advice, signing over the house can have serious financial consequences on your Mum’s pension and aged care costs, it can also have serious financial consequences on the person/people that she transfers it to including stamp duty and future CGT implications amongst other things. The other often unintended consequence of strategies like this is that it may mean that your Mum’s choices when it comes to an aged care home are reduced. It is not something you should undertake without considering all of the potential implications.
      Feel free to give us a call on 1300 855 770 or jump on our website and we can refer you to a specialist adviser.

    2. Hi my nephew has stage four terminal bowel cancer,his condition is terminal with six months to live,he wishes end of life care in an aged care facility,he lives in a small flat on his own and has a little savings, question is will he have to pay for end of life care,he’s on a disability payment

  6. Hi,
    My mother and father have moved in with me and their house is on the market for $540000. They have very little savings-maybe $6000. Both are on the pension and mum is on a level 4 aged care plan and dad on level 2 and is her primary carer. I am concerned that they will lose both their pensions and the aged care support if the house sells.

    1. Hi Melissa,
      Firstly access to aged care is based on their care needs not how much money they have so please don’t worry that your Mum is going to lose her home care package.

      When it comes to their pension, as a couple (non homeowner) they can have $693,500 in assets before their pension reduces under the assets test, the point at which their pension is lost is $1,254,500.
      Under the income test they can earn $360 per fortnight before their pension reduces and it cuts out under that test at $3,725.60 per fortnight. Assuming they end up with $546,000 in their investments they will be slightly over the income test ($35 per fortnight) and their pension will reduce (by around $17 per fortnight).
      I think it would be worth seeking some advice about whether it is a good idea to sell the home not just from a pension point of view but what that would mean if your Mum or Dad (or both) needed to move into aged care, and if you do sell what to do with the money from the sale. The numbers I have given you above are just the starting point, I expect the deeming rates will go up in July and the reduction in their pension could be greater from then, selling the house versus keeping it could have major differences in what they pay for their aged care.

  7. HI
    My father passed. Mum has early stages of dementia. she has bought into a low care facility in WA. could you tell me why Centre link class her home as asset, when her home with dad wasn’t. Mum sold the house to buy into the facility

    1. It sounds like the “low care facility” you are talking about is actually a retirement village and your Mum has bought a unit for less than $242,000, which means she is classified as a non homeowner and the home is included in her assessable assets. As a non homeowner her asset test threshold is $242,000 higher so there is no real detriment from that point of view and in fact the benefit can be that as a non homeowner she can qualify for rent assistance on the ongoing village fees. The thing that normally causes pension problems is the money left over from selling the home and buying the new one – if that’s the case it’s worth seeking advice. There are a number of excellent advisers in WA, their details are on our website

  8. Hello, my mum has onset dementia and is very lonely in her home – but doesn’t want to live anywhere else. She has approximately $100k in assets and owns her home valued around $500K. If we need to put mum into a care facility what would be the upfront costs and ongoing (annual costs)?

    1. Hi Lees lise,
      Assuming there is no protected person living in your Mum’s house she would need to pay the market price for her aged care accommodation. Ongoing she would pay the basic daily fee ($62/day) a means tested care fee of approx $3/day if she keeps her home or $15 if she sells it), any extra or additional service fees (for things like choice of meals, foxtel, hairdressing etc) and then an personal expenses (for medications, clothing etc)
      Hope this helps.

  9. Hi,
    My mother in-law moved to nursing home 6 years ago. She owns a property roughly $500,000 market value. She currently paid daily basic (out of her pension) and daily accommodation rate as her asset reach maximum cap.

    Do you think it might be beneficial if she sells the property and pay the RAD to avoid 8% interest. Will it affect her pension or any extra fee if she decides to do so?

    1. Hi Johnny,
      You need to get advice about whether to keep or sell the home, there is more to think about than just the saving on Daily Accommodation Payment. Any amount she pays as a RAD is an exempt asset for her pension but it is an assessable asset for her aged care means tested care fee. You need to make sure that the benefits outweigh any detriments. There is a list of specialist advisers on our website

  10. Hi I am 60 and on a disability pension . I have lived with my Mum all my life and she is now 85 .
    If Mum needs to go into aged care will she need to sell her home.The home is only in her name . She is on an aged pension and has no other assets than her home .
    Many thanks

    1. Hi Johnny,
      You need to get advice about whether to keep or sell the home, there is more to think about than just the saving on Daily Accommodation Payment. Any amount she pays as a RAD is an exempt asset for her pension but it is an assessable asset for her aged care means tested care fee. You need to make sure that the benefits outweigh any detriments. There is a list of specialist advisers on our website

    2. Hi Leesa,
      As a close relative, on a disability pension, you would qualify as a “protected person” and exempt the home from your Mum’s aged care means test. Her home would be exempt from her pension means testing for 2 years, after that you may need to apply for financial hardship.

  11. My sons name is on the house deeds with my name as a half owner of it so if I go into aged care does the house have to be sold even if he is not living in the home

    1. Hi Robert,
      It’s not possible to answer this without finding out more details about your situation, feel free to give us a call on 1300 855 770 and we can connect you with a financial adviser.

  12. Hi my mum has recently, unexpectedly, entered an aged care facility. She receives a part pension and owns her own home but it probably worth about 400k more than the RAD. I worried that if she sells it she will have to pay much more in care fees? She has about 150k in savings and a serious underlying health condition.

  13. Just wondering my mum has had a fall and we do t k ow what the future holds for her if she is going to go in to a nursing home or come home she owns her own home minimal savings and is on an aged pension. myself (daughter), my husband and son as well as my brother live with her. Will we have to sell the house if she needs to go in to an aged care facility.

    1. Hi Bronwyn,
      The family home is exempt from your Mum’s aged care assets if a protected person is living there. A protected person includes: a spouse or dependent child, a carer who has been living in the home for the last 2 years that is eligible for an Australian Income Support Payment or a close relative that has been living in the home for the last 5 years that is eligible for an Australian Income Support Payment.
      I hope this helps. If you have further questions or would like to speak to a financial adviser feel free to give us a call on 1300 855 770.

  14. Hello, My mother has been living with my husband and I for the past 6 years. She is a self-funded retiree now age 86 but she has dementia that is now becoming a real problem for her and she will need full time care very soon. Mom owns a home in which my sister has been residing for the past 3 years. My sister lives on her own and has stage 4 cancer. The home that my mom owns is valued about 3.5 million and she has cash assets of approximately $450,000. How will she be assessed to go into a full care facility?

    1. Hi Sue,
      I’m sorry to hear of your situation, it must be very hard. Your Mum will be a market price payer, which means she will need to pay the market price for her aged care accommodation ( she can pay by lump sum, daily payment or a combination of the two), she will also pay the basic daily fee of $62 per day and means tested care fee based on her assets and income. The means tested care fee has an annual cap of $33,309 and a lifetime cap (which includes any income tested care fees from a home care package of $79,942. You should also expect to pay an additional service fee for things like a choice of meals, entertainment and hairdressing.

  15. I am 70 years old and own a home with a friend as Tenants In Common. If he has to go onto aged care facility could his share of the home need to be sold if I’m not receiving a pension or not his carer?

    1. Hi Anne,
      It’s not possible to answer this without finding out a bit more about your situation. Feel free to give us a call on 1300 855 770 and we can put you in touch with a financial adviser. Rachel

  16. Hi, my step-father is suffering from dementia servely but is very stubborn. His home is worth nearly 7 figures. If he has to move into a aged care facility, and whaset im reading above, he will be assessed with that amount the house is worth and any other asset he may have. If he sells the house he cannot split it between family members due to the gifting rules and aged pension. What will be the best way forward for him?

    1. Hi Warren,
      If the home is kept it will be assessed up to $201,231 (the rest is exempt). If he sells it the value will be assessed based on what he does with the proceeds. He can gift up to $10,000 per financial year, $30,000 over 5 years with any gifts above this assessed for 5 years. There are other assets that have full or partial asset test exemptions too. I can’t provide you with advice but I’m happy to give you the name of a specialist adviser, just email me where you are located so I can find someone close to you. My email is

  17. Can you put the family home in a ‘Family Trust’ to make aged-care cheaper, so the house is not under scrutiny at all?

    1. Hi Simon,
      Putting the family home in a family trust is not likely to make aged care cheaper and could in fact make it more expensive, not to mention any costs associated with the transaction such as stamp duty, conveyancing etc. If this is a strategy you are considering for other reasons such as estate planning then it is definitely worth seeking advice to understand the potential ramifications on pension and aged care costs.

  18. Hi, we have an elderly parent who has first stage dementia which is getting worse, so we need to look have at nursing care homes. The spouse will stay in the family home. They have a rental property which they rent to grandson and his family. will they have to sell the rental property if one parents goes into a nursing care facility

  19. Hi Deb,
    It’s a common myth that you will have to sell your home when you move into aged care, whether you do or not is completely up to you. As the spouse is living in the home it will be exempt from the aged care means test. Investment properties are included at the market value and so is the rent (either based on the taxable income or 2/3 of the gross income). Before you make a big decision like selling the property it is worth getting financial advice so that you know all the options and the impact they can have on the cost of care, pension entitlement, estate planning, tax and cash flow. A common mistake is that people see the Daily Accommodation Payment, which is calculated at 8.36%p.a and think it makes more sense to sell the property and pay the lump sum Refundable Accommodation Deposit (RAD) but there is a lot more to consider and you can easily end up costing yourself more than you would have paid in the DAP in other expenses.

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