Aged Care – Treatment of Former Home
Rental income from a former home is now assessable in the calculation of means tested fees for Aged Care residents who are new to permanent residential care from 1 January 2016.
This legislative change has been applied prospectively (i.e. existing or transferring residents who first entered permanent residential care prior to 1 January 2016 will have their arrangements grandfathered, and rental income will remain exempt in the calculation of their means tested fee).
This is a significant change and a continuation of the government’s aim to place greater funding responsibility on residents.
Renting the former home may, however, continue to present a significant opportunity for new residents to permanent residential care. Rental income and the full capital value of the former home will remain exempt in the calculation of Centrelink Age Pension and Department of Veteran’s Affairs Service Pension payment rates. Further, the capped amount of the capital value of the former home only ($157,987.20) will continue to be included in the calculation of a new resident’s means tested fee.
Aged Care continues to be a complex area that is often impacted by legislative changes, and the benefits of receiving the right financial advice at the right time cannot be understated. If you (and/or a loved one) are in the process of moving into permanent residential care, I encourage you to see how we can help and to get in contact with us to discuss the planning options available to achieve an optimal financial outcome during this transition.