For many Melbourne families, an investment property isn’t just an asset on a balance sheet. It’s the unit bought in Hawthorn in the 90s. The Camberwell property that helped fund school fees. The long-held investment that was always meant to support retirement – or one day pass to the grandchildren.
When aged care becomes necessary, one of the most common questions I hear is:
“Should we sell the investment property to pay for aged care – or keep it?”
There isn’t a simple answer. And the interaction between investment property and aged care fees in Australia is more complex than most families realise.
As someone who has worked with families in this situation for many years, I can tell you this: the right decision depends on understanding the full picture – not just the rental income.
How Investment Property Is Treated for Aged Care Means Testing
When a person enters residential aged care, both their assets and income are assessed to determine their fees.
An investment property is generally:
- Counted as an assessable asset
- The rental income is assessed as income
- Included in calculations that affect means-tested care fees
This can influence:
- The daily means-tested care fee
- Age Pension eligibility
- The overall cost of care over time
Many families assume, “the rent will cover the fees.”
Sometimes it helps. Sometimes it doesn’t. The only way to know is to properly model the numbers.
Cash Flow vs Liquidity
Aged care fees are ongoing and payable daily. Even in premium Melbourne facilities, costs can feel manageable on paper – until you look at:
- Tax implications
- Increasing care costs over time
Rental income may contribute, but it may not provide the liquidity required for:
- Refundable Accommodation Deposits (RADs)
- Ongoing daily payments
- Unexpected health or lifestyle costs
Selling creates liquidity – but removes the asset and future income stream.
This is where careful financial modelling becomes essential.
CGT and Long-Held Property
For many families in inner Melbourne, investment properties have been held for decades.
If sold, there may be:
- Capital Gains Tax implications
- Timing considerations
- Estate planning consequences
For some families, retaining the property may align with long-term wealth transfer goals. For others, selling may simplify the structure and reduce stress.
There is no universal answer – only what works best in your specific situation.
The Emotional Part
I’ve sat across the table from families where:
- Dad bought the property in 1992 and was incredibly proud of it
- Mum always intended it to go to the grandchildren
- The property represents independence and success
Aged care decisions are rarely just financial. They are layered with history, emotion, and family dynamics. That’s why clarity matters.
What Families Often Overlook
When considering whether to keep or sell an investment property in aged care, families often underestimate:
- The interaction between assets, income and aged care fees
- The impact on a spouse if remaining at home
- How different payment options affect long-term estate value
- The administrative and paperwork burden involved
Without proper modelling, decisions are often made based on assumptions – not informed clarity. And in aged care, small misunderstandings can have significant long-term financial consequences.
After many years working with Melbourne families navigating aged care financial decisions, I understand both the technical complexity and the emotional weight involved.
My role isn’t to rush you into selling – or keeping – anything.
It’s to:
- Help you understand how your investment property impacts aged care fees
- Clearly model your options
- Explain the implications in plain English
- Coordinate the paperwork and administrative requirements
- Make the entire process feel manageable, not overwhelming
You don’t have to work this out alone.
If you’d like clarity around your situation and a structured approach to your aged care financial planning in Melbourne, I’m here to help.
