All Topics / Help Needed! / Elderly parents PPOR ?

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  • Profile photo of InnaInna
    Member
    @inna
    Join Date: 2004
    Post Count: 17
    February 3, 2004 - 8:11 am

    This morning I phoned centrelink and asked:

    If my parents (who are on an old-age pension) rent their house out, and then rent a villa up the coast – what happens with their pension ??
    (I also told her that my parents house is worth $400,000 and they own it outright.)

    She said that my parents house would no longer be their PPOR and that the villa that they go and rent will be their new PPOR.
    She said that their house would now be considered an asset and they would lose a large amount of their pension.

    Is she right ??

    Thanks, Inna

    Profile photo of bluecatbluecat
    Participant
    @bluecat
    Join Date: 2004
    Post Count: 106
    February 3, 2004 - 8:18 am

    Hi,
    Welcome to Forum.

    The income that they generate from their house would be counted against their income from gov. – i’m not sure if they used their house to buy a IP if Centrelink would count that expenses – i think they would unless they can put their money through some sort of super fund – my parents had same issue except my father is in shares – and he put his money through SMSF and then they didn’t exist (sort of)

    cheers,
    bluecat

    Do today what you want to do tomorrow

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213
    February 3, 2004 - 1:10 pm

    I beleive that ‘the rules’ are different between the ATO and centrelink. Centrelink assess you on your income. If their house was rented than that rental income would result in their overall income increasing and so they may end up reducing their pension because of this.

    They also base the pension on the assets of the pension(ers) with the home exempt from the assets test. Once it is rented out it is included in their assets list, so this may also result in a reduction or a cancellation of their pension.

    From a tax perspective, they will also have to pay tax on the extra rental income they receive, but they could still count this house as their PPOR for up to 6 years as long as they do not own another property. They could sell it CGT free during this time.

    I beleive that the person on the phone was probably correct in what they told you. But it wont hurt to ring again to reconfirm.

    It may work out better if your parents were to sell their property and buy a new one, but please get some proper advise on the matter as I am not qualified!

    Terryw
    Discover Home Loans
    North Sydney
    [email protected]

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of InnaInna
    Member
    @inna
    Join Date: 2004
    Post Count: 17
    February 6, 2004 - 6:45 am

    Thanks Bluecat & Terry W

    looks like that option is out of the question. Back to the drawing board ! :)

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