What is my homeowner status in a retirement village?

By Rachel Lane

“Considering a home in a retirement village under a leasehold contract has left me wondering — does this make me a homeowner for the age pension?” It’s a question that’s come up before, and rightly so, because it can be a bit of a head-scratcher. You’d think knowing if you own your home is straightforward, but when downsizing to a retirement community, the waters can get a little murky.

Here’s why it’s important: Your status as a homeowner is actually a key piece in the puzzle that is your pension calculation. It’s also tied to whether you can pocket some extra cash in rent assistance, boosting your pension by up to $185 every fortnight.

Most retirement village contracts will label you as either under a leasehold or a licence arrangement. Both give you the rights to your home and shared amenities, with legal safeguards for your investment. And in the fine print, what you pay could be termed a payment, a loan, or even a donation.

From the perspective of your pension, whether you’re seen as a homeowner comes down to the amount you’ve paid. If it’s above the extra allowable amount, currently pegged at $242,000, congrats — you’re considered a homeowner. This means the value of your home won’t affect your pension, but it does mean saying goodbye to rent assistance.

But, if your payment to the village is at or below that $242,000 mark, the script flips. You’re not a homeowner in the eyes of Centrelink, and the amount you’ve paid becomes part of your assessable assets. The silver lining? You might just qualify for rent assistance, and there’s no downside since the higher asset threshold for non-homeowners has got you covered.

Land lease communities play by their own rules. Think of it like owning a yacht — you own the vessel but pay for mooring. In these communities, you’re always considered a homeowner and you might also snag rent assistance based on the site fees.

Figuring out if you’re a homeowner is step one in the Age Pension dance — and it’s not as simple as ‘do I own my home or not.’

Rachel Lane, the brain behind Village Guru, created the software to clear the financial fog of downsizing. For more insights, use our Find a Village tool to search for Retirement Community that can offer you a Village Guru Report or call 1300 855 770 for a chat.

 The original article was published on the Downsizing website.

Rachel Lane is the author of Downsizing Made Simple with fellow finance expert Noel Whittaker. The 2nd edition is out now. The Downsizing Made Simple website is here to guide your downsizing journey with great information, tools and easy-to-use resources.

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A Village Guru Report showcases the costs of entering, living in, and exiting a village, coupled with projections of your Age Pension and Rent Assistance entitlements. It can even show you how much funding is available through a Home Care Package and what the fees will be.

A village that can offer a FREE Village Guru Report, will help you make the move with confidence.

Disclaimer: While a Village Guru Report provides valuable insights, it doesn’t replace professional financial advice. You should seek advice from an accredited Retirement Living and Aged Care Specialist® Financial Adviser. Connect with an Adviser.

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