Most likely yes, unless you pay the same amount for your new home as you get for your current home.

How much Age Pension you will receive will depend on the contract for your new home and whether you are classified by Centrelink as homeowner or non-homeowner.

If you are moving to a home with a freehold or strata contract then you will be classified as a homeowner for pension purposes.

If you are moving into a granny flat or retirement village (which typically have a leasehold or licence contract) then the amount you pay will be used to determine if you are a homeowner or not.

• If the amount you pay is above the Centrelink threshold then you will be a homeowner and your home will be an exempt asset.
• If the amount you pay is below the Centrelink threshold then you will be a non-homeowner, the value of your home will be included in your pension assets (but don’t worry, as a non-homeowner the asset threshold is higher) and you may qualify for rent assistance on top of your pension.

If your home is in a land lease community, caravan park or is a houseboat then you will be classified as a homeowner but you may qualify for rent assistance on top of your pension based on the site fees or mooring fees you pay for your home.

To learn more about each type of home go to downsizing options.

Retirement Villages are not a financial investment. If you are thinking about moving into a Retirement Village you should think of it as a lifestyle investment, like a boat, a caravan or a car not an investment property. The benefits you get are the time you spend enjoying the activities and amenities, socialising with other residents and the safety and security of living in the community. The greatest predictor of whether or not you thought it was a worthwhile investment won’t be based on the price you paid but how much enjoyment you got from living there so it is a good idea to do your research, don’t choose a village just based on the old real estate adage of “location, location”.

Age pension age has been increasing from 65 years to 67 years over the past 6 years (it has been going up by 6 months every 2 years). From 1 July 2023 the Age Pension age is 67.

On 1 January 2023 significant changes were made to how Centrelink assess the proceeds from your home when you downsize.

Under the assets test the proceeds of the sale of your home that you intend to use to purchase or build a new home have an exemption of 2 years. If you have extenuating circumstances the exemption can be extended by an additional year, taking the maximum exemption period to 3 years.

Under the income test instead of including the money that will be used to buy your new home with your other investments, they only apply the lower deeming rate (as at 1 July 2023 0.25%) to these funds.

If you qualify for the Age Pension then you may qualify for rent assistance when you downsize depending on where you downsize to and how much “rent” you pay.

As a general rule if you downsize to a retirement village or granny flat arrangement and you pay less than the Centrelink threshold for your home, then you can qualify for rent assistance based on your ongoing accommodation costs.

If you downsize to a land lease community, caravan park or houseboat then regardless of the amount you have paid for your home you can normally qualify for rent assistance on the site fees or mooring fees.

Of course if you are downsizing to a home you rent then you can qualify for rent assistance on that.

If you are downsizing to a home that you own (such as a freehold or strata-title arrangement) then as a general rule you won’t qualify for rent assistance.

In real estate terms a granny flat is a self-contained dwelling that is separate to the main home but on the same property (typically it is built in the backyard of the children’s home and used to house a parent or parents).

In Centrelink terms a granny flat arrangement can be almost anything, it can be the family home you have always lived in, part of a home a dwelling attached to the home or a separate dwelling altogether and there is no requirement for the kids to live on the property.