You should feel very privaleged, this is my first post on this forum, and it is just for you.

To my mind there are two things you need to consider, the financial and emotional.

The Financial;
I am asuming your mum already pays some income tax, and that there will be a gap between the income (rent) and expenses (interest, council rates, management expenses) for the home.  So she will be out of pocket for the difference between the income and expenses, lets say $100/fortnight. 

This means her taxible income from her other job will be reduced by $100/fortnight, so she will pay less tax.  I assume she isn't a corportate high flyer, so lets assume she is only paying 15% tax.  The Tax department will pay $15 of her expenses, and she will pay $85, the rent is paying the rest of the expenses.  So financially it seems good, but not ideal as a pure investment, because she has nothing to depreciate, so it isn't cash flow positive. Her only real gain is the capital growth over the period of time she rents it out.

Be aware, as soon as she isn't living in the house, it becomes 'an asset' for all governement tests, so any pensions/benefits she might be receiving will be affected.  There is a limit on how long she is allowed to not live in the house, before she must move back in or it will forever be counted as an Asset for pensions etc. ~check with an accountant for details~

The Emotional;
Your mum is going to be living with her Aunt, and all the emotional stuff that happens there, and, someone is going to be living in her house…  what if they don't mow the lawns right, or leave the outside light on when she wouldn't.  I know all these little things would upset my mum, because she is all kinda crazy .  Also, you need to consider both the emotional and financial issues that will arise from any damage.

The positive emotional side is that, aside from the notice period, if things don't work out with her Aunt, she still has her own place to go…  I bet she looked for quite a time before selecting the house, and it was her home, and it is a bit distressing to sell it…  this is opposed by the stress of the paperwork, bills to pay, complications at tax time.

I would suggest that this is a reasonable short term strategy, because it is convenient.  You wouldn't do it as an investment strategy, because she isn't maximising the tax advantages, and she needs to be sure about the implications on any future government benefits…

Cheers,
Darryl.