One of the most common questions I hear from families is: “If Mum needs to go into aged care, do we have to sell the house?” The short answer is not necessarily. Many people assume that moving into residential aged care automatically means selling the family home, but that’s often not the case. Every family’s financial situation is different, and understanding the rules before making any major decisions can potentially save you big dollars.
When you don’t need to sell the house
If there is a protected person continuing to live in the home, you generally won’t need to sell it for aged care purposes.
A protected person may include:
- Your spouse or partner.
- A dependent child.
- In some circumstances, a carer or close relative who meets specific eligibility requirements.
This means if Mum moves into aged care but Dad continues living in the family home, there is usually no requirement to sell the property.
It was just mum in the house, now it will be empty so what happens?
If one person has been living alone and now needs to move into residential aged care, the decision becomes more complex. While some families immediately think selling the home is the obvious choice, that isn’t always the most financially beneficial option.
Depending on your circumstances, it may be better to:
- Keep the home.
- Rent the home out.
- Sell the home and invest the proceeds.
The right decision depends on a range of factors, including your assets, income, Centrelink entitlements and how aged care fees will be calculated.
Understanding the Centrelink rules
For people receiving a Centrelink pension, there is an important rule that many families aren’t aware of. When someone moves into permanent residential aged care, their former home can remain exempt from the Centrelink assets test for up to two years, provided certain conditions are met. After this period, if the home is still owned and no longer qualifies for an exemption, it may become an assessable asset.
This can have a significant impact on age pension entitlements, with some people seeing their pension reduced or even lost altogether. Because these rules can have long-term financial consequences, it’s important not to make decisions based purely on assumptions.
Selling isn’t always the best option
Every situation is different. For some families, selling the home makes perfect financial sense. For others, keeping the property or renting it out may provide a better financial outcome. The key is understanding how each option affects:
- Aged care fees.
- Centrelink benefits.
- Cash flow.
- Future financial security.
- Estate planning.
What appears to be the simplest solution isn’t always the most cost-effective one.
Get advice before making a decision
Selling the family home is one of the biggest financial decisions you’ll ever make. Before putting the property on the market, take the time to understand all of your options and how they affect your overall financial position. Having a clear strategy before making any decisions can help you avoid costly surprises and ensure you’re making the choice that’s right for your family’s circumstances. If you or a loved one are considering residential aged care, obtaining personalised financial advice can provide clarity and confidence during what is often an emotional and overwhelming time.
