QUESTION:
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My mum is on the pension and owns her own home. She lives by herself. This is not a satisfactory arrangement and I wish to have her live with us.
I am looking at selling her house (which is worth more than $1 million) and buying another house (with some money I would add myself). The aim is that mum and my family could move into the house & live together.
Would this affect her pension? Would it make any difference if the property was in only her name or in both our names? I own my own home & have some rental properties. I will rent out the house we currently live in.
I have been talking to Centrelink about various scenarios, but have not covered this one. I am about to talk to some financial advisers about this.
ANSWER:
Age care expert Rachel Lane says: "The simple answer is 'yes' if the house is owned by the mother (either jointly or entirely) then Centrelink will not recognise that a granny flat right has been established, it will simply be the purchase of a new house.
"While this doesn’t necessarily matter now, in the future if the mother needs aged care it may be included in her assessable assets and be difficult to realise.
"If the mother transfers the value of the house for her right to occupy part of the new house with the house being in the children’s names then she will be considered to have established a granny flat right.
"Because the amount is greater than the entry contribution limit she will be considered a homeowner and the amount she has paid will be exempt, i.e. her pension position will be unchanged."