Things to consider before selling the family home 16



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After decades of paying off a mortgage, the idea of your home as an asset instead of an expense is a tremendous relief, particularly when it comes to supporting your finances in retirement. However many retirees are unaware of the financial implications of decisions made regarding the sale of a house and what it can affect.

Whether sentimental or financial, selling the family home is a major decision when considering a move into residential aged care. The decision doesn’t need to be a battle between the wallet and the heart; the right solution is dependent on your individual situation and there is no requirement to pay a refundable accommodation deposit (RAD) for aged care through a sale.

What should I consider?

To assist with a solution you will need to consider the following:

  • impact of the home’s value on the size of RAD payable;
  • whether the sale will impact Age Pension eligibility;
  • suitability of the home for rental without significant expenditure on maintenance or updating;
  • whether family members are prepared to undertake the necessary landlord responsibilities; and
  • if one partner wishes to remain at home if the other moves into aged care.

The impact on pension entitlement is not the only financial consequence that requires thought. Sale of the family home can have significant tax implications, specifically for Income Tax and Capital Gains Tax (CGT).

If the home is leased, income from rent will be assessable for income tax purposes. If the home is sold, full CGT exemption is generally expected.

If the home is not sold and also not rented, it may be assessed as the main residence for an unlimited period of time.

If the home is rented, it may still be treated as the main residence however for only up to six years and a sale after that may have implications on CGT.

What can I do now?

It is important to understand how decisions made now and throughout your retirement will impact your wealth, your pension, tax implications and your final years of care. Seeking financial advice will help you stay informed and allow you to navigate any potential areas of concern with time and opportunities on your side.

Have you been through the decision making process for yourself or for your parents? What do you wish you knew beforehand that you know now?


This article has been sponsored by MLC. IT provides, what we feel, are valuable insights to help you make informed financial decisions in retirement. For more information click here. 


Important information and disclaimer:

This article is intended to provide general information only and has been prepared by MLC Limited ABN 90 000 000 402 (AFSL number 230694) without taking into account any particular person’s objectives, financial situation or needs. Investors should, before acting on this information, consider the appropriateness of this information having regard to their personal objectives, financial situation or needs. We recommend investors obtain financial advice specific to their situation before making any financial investment or insurance decision.

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  1. Like all these ‘articles’ just makes a few ‘suggestions’ with the standard ‘see your financial adviser’. Often wonder if people writing this stuff don’t know the subject or just wanting not to incriminate themselves. ???

    2 REPLY
    • I agree with you, Bev. Instead of educating us so we don’t need to spend money on a financial adviser, all these articles do is point us to the profession. The article is sponsored by MLC so it is hardly independent advice. When I was about to retire in 2010, I got all the advice I needed at the time for free from a friendly Centrelink adviser. If this site really cared about helping the over sixties, it would point us to where we can get the information we need without having to pay a financial adviser.

  2. Sold back in 1995 after my father died. The property market crashed at the same time so we (2 brothers and myself) didn’t get as much as we thought we would.

    1 REPLY
    • Same here Susan. Sold our mum’s house after she passed away and the area is near CBD so value has increased about 10fold in the 10 years since we sold. But it was the right choice at the time.

  3. What a beautiful home

    1 REPLY
    • Isn’t it lovely? I had my house up for sale but the market was dismally slow so I took it off again. I have friends around and good neighbours, I love my house and it is close to the main shopping area. I also have a lift in case I need it later. I have now seen it with different eyes after looking at what was available at a price I could afford and the amount I was offered and I wouldn’t have been as well offf. I think I shall stay.

  4. We are doing it before we retire, downsizing will be an enormous physical and financial relief. Love the old home but the size of it and the acres need younger fitter people to do it justice.

  5. mike here-we looked at a self contained unit in Gladstone SA. You are never the owner of the property. The ‘Licence to Occupy’ cost $99,000 decreasing in value by 5% a year until the fifth year when it decrease stops, so the repurchase price given to you when you sell is $75,000. If you take the loss of use of the $99,000. The loss of the interest on the $99,000. loss of use of $10,000 for new furniture, the loss of interest on the $10,000, the maintenance fee of 50 a fortnight over the first 5 years. The $75,000 you would get on resale would have been eaten into by somewhere near $60,000. Giving you about $15,000 change out of your initial $99,000. Much, much cheaper for us to retain our mortgage free house & pay the extra for petrol to our local supermarket (80 odd kms away) for our shopping.

  6. We moved on to a boat 10 years ago……Down sizing is good……we now are going to retirer in 12 months time…….just bought caravan so we can go travelling as well.HAVING A WONDERFUL LIFE BEFORE EITHER ONE OF US DIE…….WE ENJOY TO THE FULLEST.

  7. It was very upsetting to sell the home I grew up in just for it to be replaced by 2 ugly cement homes…

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