How does a jointly owned property affect aged care fees?
One of the first questions many families ask when a loved one is moving to a care facility 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 a number of 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.
- When the sole occupant moves to a care facility
For aged care purposes, where a person living alone enters permanent residential aged care the net market value of the family home is assessed up to a capped value of $171,535.20 (as at 1 June 2020). This valuation forms part of the calculation of their aged care fees. You can find out more about this in our booklet Your Financial Guide to Aged Care.
- When a spouse is living in the home
If one member of a couple goes into permanent residential aged care and their spouse remains at home, then the home is not assessable for aged care assets test assessment. This can reduce the aged care costs. In certain circumstances, non-assessment of the home could enable the joint homeowner to be admitted as a low means resident. One thing to take into consideration is what happens if the spouse later also moves into residential care. At that point the family home becomes assessable under the aged care assets test up to its capped value for them both. This can mean an often-unexpected increase in the care and accommodation payments for the original resident.
- When a carer in the home is eligible for an Income Support Payment
If a carer is living in the resident’s home, then the home may be exempt from the assets test assessment for aged care purposes. To qualify the carer must have lived in the home for 2 years prior to the resident entering care and be eligible for an income support payment (e.g. Jobseeker payment, disability support pension, carer payment etc). The family home continues to be exempt from the aged care assets test assessment if the carer remains there and continues to receive an Income Support Payment. It’s important to note that the Carer’s Allowance is not an Income Support payment.
- When a close relative is eligible for an Income Support Payment
The family home aged care assets test exemption rule can also apply where the resident is living with a close relative. In this situation they must have lived in the resident’s home for 5 years prior to the resident entering care. They must be eligible for an Income Support payment (examples listed above). The relative is usually a sibling, a child or grandchild. In this scenario, as compared to the previous one, the relative doesn’t actually need to receive an Income Support payment, just be eligible for it. Exemptions may also apply for certain dependant children who live in the family home.
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 $30,000 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.
Aged care financial matters can be complex, so it’s important you are aware of your options and how they apply to your family’s circumstances. We have a team of specialist financial advisers who can help you make these important decisions.
This includes the long-term impacts on aged care fees, income (including government benefits) and assets, including the family home.