How does a jointly owned property affect aged care fees?

One of the first questions many families ask when a loved one is permanently moving to an aged care home is what to do with the family home. The decision is never purely a financial one, however knowing the financial impact is a key factor in helping to confidently make decisions that best suit your family.

The assessment of the family home is important as it interacts with the aged care costs a resident may be required to pay.  How much is assessable, and for what period, varies depending on several factors such as who lives in the home and any government benefits, they may be receiving.

When it comes to decisions around the family home, the ‘obvious’ decision may not always be the best choice.

Let’s look at some common scenarios.

  1. When the sole occupant moves to a care facility

When it comes to the aged care assets test, if a person living alone enters permanent residential aged care, the net market value of their family home is assessed. Currently, it is assessed up to a maximum amount of $193,219 (until 19 September 2023) while it is kept. Any amount exceeding this maximum is not included in the aged care assets assessment. The maximum amount applies individually and is adjusted each March and September.

If the former family home is subsequently rented out, the net rental income becomes assessable under the aged care income test. These amounts are then factored into the calculation for the resident’s aged care fees. For more detailed information, please refer to our booklet, Your Financial Guide to Aged Care.

  1. When a spouse is living in the home

If one member of a couple enters permanent residential aged care while their spouse remains at home, the family home will be exempt from the aged care assets test assessment during that period. This exemption generally helps reduce the overall aged care costs and, in certain cases, may allow the spouse entering care to be admitted as a low means resident.

However, it’s important to consider what happens if the spouse leaves the home or moves into residential care. At that point, the family home becomes assessable under the aged care assets test, subject to a maximum amount. This change usually led to an unexpected increase in the care and accommodation payments for the original resident in care.

  1. When a carer in the home is eligible for an Income Support Payment

If a carer is living in the resident’s home, the home may also be exempt from the assets test assessment for aged care purposes. To qualify for this exemption, the carer must have lived in the home for 2 years before the resident entered care and be eligible for an income support payment, such as the Jobseeker payment, disability support pension, carer payment, etc.

The family home continues to be exempt from the aged care assets test assessment as long as the carer remains there and continues to receive an Income Support Payment. It’s important to note that the Carer’s Allowance does not qualify as an Income Support payment.

  1. When a close relative is eligible for an Income Support Payment  

The exemption rule for the family home under the aged care assets test can also apply when the resident is living with a close relative. In this case, the relative must have lived in the resident’s home for 5 years before the resident entered care. They must also be eligible for an Income Support payment (as mentioned above).

When the ‘obvious’ decision is not necessarily the best one

Christine contacted us because her father had to move to permanent aged care. Christine and her father owned their home as tenants in common. She lived there with her family for the past 15 years. As her father’s only other asset was $35,000 in a bank account, Christine thought they would have to sell the family home to afford her father’s aged care costs.

After discussing their personal situation with us, it become apparent that her father’s share of the family home was considered to be unrealisable. Because of that, the family home was excluded from his assessable assets under the financial hardship rules for one year, so he was only required to pay the basic daily care fee for that time.

5. How we can help

Aged care finances can be complex, so it’s important to understand your options and how they relate to your family’s situation. It’s worth noting that the rules regarding the former home differ for the Centrelink and DVA assets and income tests.

Our team of specialist financial advisers are here to assist you in navigating these rules and making informed choices that consider both immediate and long-term outcomes.

 

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