Hi Everyone,
Was chatting with one of the tradesman working on our house over the weekend and he mentioned that he was doing some work on a house owned by a lady who doesn’t want it but not sure how to get rid of it.
The situation is, the lady’s neighbour left a house to this lady in her will. This lady who is currently receiving the pension doesn’t want to rent it out nor sell it because any income will affect her eligibility to receive the pension.
She’s offering the house as free accomodation to anyone that needs somewhere to live.
My boyfriend and i were trying to think of ways of creating a win-win situation where we can buy the house but have been unable to come up with any ideas, all the ideas we’ve come up with involves money being deposited into her account which affects her pension.
Any suggestions would be most appreciated….
Kim
Hi Kim,
I’m no expert on the pension, but I would think that the fact that she now owns the property it would effect her in the assets test for her pension.
I believe pensioners are also allowed to earn a certain small income before the pension begins to reduce.
i don’t see how she can offer the place free of rent when it is going to cost her money to keep the property i.e. land rates, water rates, maintenance and possible land tax.
This dear lady needs to sit down with a good accountant/advisor and work out what the best strategy is for her best interests.
cheers,
sue [biggrin]“Be careful not to step on the flowers when you’re reaching for the stars”
Hi Kim,
I think diclem has made some valid points. I am not 100% certain, but I am also pretty sure Centrelink allows pensioners to earn X amount before reducing their payments. I believe the property will attract an asset test, the limit of which, again I am not certain.
I agree that this lady sounds lovely and very generous, and no wonder the neighbour left her his/her property!!! Do try and encourage her to seek the services of a good accountant and/or financial expert who can advise her of her options.
Finally, it is very heart-warming to see that you have taken the time to seek advice on her behalf. For what it’s worth (I am not overly religious myself) but God Bless You.
Cheers,
Jo
You don’t say if the house is near her current home (was it the neighbour’s house or a house somewhere else that the neighbour owned?) but couldn’t she move into the house she has inherited (if that’s the term) and immediately sell it, so no CGT becuase it’s her PPOR, and structure the payment for the house over 20 years plus a 5% deposit to pay the agent/legals ie 95% of the purchase price paid every year to her as monthly instalments over the next 19 years.
Then she moves back straight back into her current home and receives 19 years of a monthly income stream possibly tax free plus her pension? What a great gift from her neighbour to give her a comfortable retirement. Of course, all qualified accountants should comment as to how Centrelink would regard this but worth researching.
Cheers
skippygirl
)Thanks Diclem and Monopoly,
They were some good points, we didn’t know that there was a limit so I think i’ll call Centrelink now and then maybe suggest she go speak to an accountant.
It is best to give them a call (and pretend you are asking about a relative?). You can also look at the centrelink website for more information. It is pretty complex now, and they have closed a lot of the loopholes.
I think it will be hard to do without effecting the lady’s pension.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
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Just quickly Kim,
Because of her age, I am sure if you “shop around” you may be able to find one (accountant and/or financial planner) that will visit her. I know financial planners are “mobile” but accountants, not so confident. Give it a shot anyway, can’t hurt to ask.
Cheers,
Jo
Ok, just rung Centrelink, they said she can have up to $78,000 (cash value) before she will lose the pension. This $78,000 is all up whether a portion be invested in shares or other property. Also, the market value of her own home needs to be less than $150,000 if she is to receive the full pension.
She’s not allowed to sell the house extremley below value is she?
That sounds like a good idea skippygirl, i’ll have to investigate further.
Hi Kim,
“Her own home” is not counted. When on any centrelink payment, if asset tested, the payee’s home is never taken into consideration, it is only assets outside of that, i.e. car, boat, IPs, shares etc.
What is the estimated value of this inherited property???
Jo
Extremely below value huh, kim? how is this win/win? I hope the lady receives good legal advice.
kay henry
i’m not sure but i’m guessing mid $100’s range.
i think what she said was the market value of her home can be up to $150,000 to receive the full benefits of the pension but as the value increases, the pension benefit decreases???
so i’m guessing she wouldn’t be able to just sell the house for $78,000???
Kim,
Forget the value in this lady’s OWN HOME, and concentrate ONLY on the INHERITED property for a minute.
If the value of it is in the mid 100’s as you state, there should not be an issue. She can sell it, and still not lose any of her entitlements.
Oh and yes, I do agree, professional legal advice would be best. I understand what you were saying, so there is no need to justify yourself to me, I know you were just trying to ask for advice on this lady’s behalf; nothing sinister in it.
Jo
thanks for your advice monopoly….and i think i’ll ring around a few accountants to see if they do home visits like you suggested.
Much appreciated advice everyone.
kim- a few questions…
Is this lady asking you to assist her? And how can you think that if her house is worth in the mid-100k’s, and you offer her 78k, that that is win/win? Are you suggesting that you would offer her half the value of the home, and that is win/win?
kay henry
Personally I feel that if she chooses out of her own free will to sell it for $78K, then it sounds perfectly fine to me provided …
– she is clearly aware of the REAL value of the property (i.e. mid $100K)
– no pressure from kim or anyone connected to the buyer
This lady told our tradesman that she want to get rid of the property because she’s paying council rates etc but she doesn’t want to receive any income from it (i.e she can’t rent it out and she can’t sell).
I’m not saying we’d offer her $78,000 and she should take it, our question is how she can sell (at a price she’s happy with of course) and not have her pension affected in any way.
I’m not trying to scheme her in anyway at all.
It’s okay Kim, not all of us in here are so suspicious. I think it was just the “win/win” thing that raised a few concerns, but most people in here wouldn’t give it a second thought. No one is suggesting anything untoward. And I ACTUALLY READ your post which suggested that the $78,000 was figure given to you by Centrelink and NOT what you were trying to pay for it!!!!
Jo
thanks monopoly…..i had to re-read my initial post in case i worded it in a way to make people think i’m only interested to make quick dollar which is not the case…
and yes the only reason for the $78,000 is because that is the figure Centrelink gave in regards to the limit in assets before the lady loses out on her pension.
Actually, kim, I was referring to this comment you made:
“so i’m guessing she wouldn’t be able to just sell the house for $78,000???”
I was not inferring anything. I was referring to your own words.
And just because someone does not agree with things, does not mean they’ve misread.
kay henry
Stop being so bloody sensitive you lot! The tippy toeing is getting to dam noisy.
Kim,
A thought that came to my mind was maybe you could “rent” it from her at say the cost of annual ownership (including maintenance) plus upto whatever Centrelink minimal allowance is and then sublet it to others for a profitable rent, she gets to keep her property for a rainy day at no cost to her and you get to make a cashflow on little outlay.
I also liked the suggestion of a monthly payment system for a purchase, why don’t you speak to your own solicitor for the legalities of that.
Good luck and keep us up to date.
CHeers
Leigh K[biggrin]
)
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