So, you’ve bought the caravan, mapped out your journey and you’re about to hit the open-road. You plan to be gone a while, so you’re in two minds as to what to do about your home. Do you leave it vacant, have someone house-sit, or maybe rent it out for some extra pocket money along the way?

Many people discount the third option of renting out their home for usually two reasons:

a)         They don’t want strangers in their home; and

b)         They’re worried how it may affect or even cut-off their pension.

I can definitely understand those that are uncomfortable with renting out their home and the possibly of having a bunch of twenty-something-year-olds trash the place. For those that are open-minded to leasing their home, there may be some good news when it comes to your pension entitlements.

You can obtain a one year temporary vacation from your home from Centrelink. This means you would still be considered a homeowner and your home continues to be exempt from the assets test (for a year).

Generally, any rental income you receive is counted towards the income test of the pension, less any allowable deductions. Whilst this may mean you lose part of your pension, the rental income you gain should be at least double the amount of this reduction (providing you’re still eligible).

How about if you plan to move from your home permanently and rent elsewhere?

As I mentioned, Centrelink do not assess the value of your principal home against the Age Pension. However, if you move out of your home into another residence and rent out your home, it would no longer be deemed your primary residence. Instead, it would be treated as an investment property with the value of the home assessed as an asset and any rent would be assessed against the income test of the pension.

As a non-homeowner, you do have access to a higher asset limit than as a homeowner. You may also qualify for rent assistance on top of your pension. These two factors may assist in offsetting any impact on your pension payment.

Information provided in this article is general in nature and does not constitute financial advice. Before making any decision based on this information, you should assess your own circumstances or seek advice from a financial adviser. Wally David is an Authorised Representative (318432) of Wealth Managers Pty Ltd, AFSL No. 232701. 

Are you planning to hit the road and enjoy the grey nomad lifestyle? Share your experiences below.