4.6.3.60 Exempting the Principal Home - Temporary Vacation of Property

Summary

An income support recipient's principal home MAY continue to be an exempt asset (1.1.E.170) when they are NOT living in it.

This topic discusses:

  • when an absence from the principal home is temporary,
  • the exemption period for temporary vacation,
  • the extended exemption period for temporary vacation - home lost or damaged (from 1 July 2007),
  • the effect of an income support recipient's temporarily occupying the principal home, and
  • the effect of selling the principal home during a temporary absence.

Definition of temporary vacation

Unless an income support recipient states a definite intention NOT to return to their principal home, an absence should generally be regarded as temporary. The income support recipient remains a homeowner and is only eligible for RA in limited circumstances.

If an income support recipient does NOT intend to return to the principal home, the home is an assessable asset (1.1.A.290), and the higher non-homeowner allowable assets threshold applies.

This does not apply if an income support recipient vacates the principal home to provide or receive a substantial level of care (1.1.C.15). In these cases, care situation (1.1.C.25) provisions apply, and the income support recipient's intention to return home is irrelevant.

Act reference: SSAct section 11A(1) Principal home, section 11A(9) A residence of a person…, section 11(4) Homeowner

Policy reference: SS Guide 4.6.3.20 Determining Homeowners & Non-homeowners, 4.6.3.70 Exempting the Principal Home - Care Situations, 4.6.5.30 Assessing Property, Real Estate & Unit Trusts

Temporary vacation exemption period

If an income support recipient temporarily vacates the principal home, the home continues to be the principal home and the income support recipient continues to be defined as a homeowner, for up to 12 months. The exemption applies even when the income support recipient expects to be absent for more than 12 months.

After a 12 month temporary absence the home is NO longer the income support recipient's principal home.

Exception: Where the home is lost or damaged the temporary absence can be extended to up to 24 months if certain criteria are met.

Extended exemption period for temporary vacation - home is lost or damaged (from 1/07/2007)

If an income support recipient's principal home is lost or damaged the home can continue to be the income support recipient's principal home for a period of up to 24 months if:

  • the loss or damage was not wilfully caused by the income support recipient, and
  • the income support recipient has made reasonable attempts to:
    • rebuild, repair or sell the principal home, or
    • purchase or build another principal home, and
  • the income support recipient has been making those attempts within a reasonable period after the loss or damage, and
  • the income support recipient has experienced delays beyond their control in purchasing, building, repairing, or renovating another principal home.

All of the above criteria MUST be met. If one of the above criteria is not met then the income support recipient CANNOT gain an extension of the temporary absence from the principal home provisions to up to 24 months.

Act reference: SSAct section 11A(9) A residence of a person…

Making reasonable attempts

An income support recipient would be considered to be making reasonable attempts (to rebuild, repair or sell the home, or purchase or build a new home) IF they entered into some form of agreement including:

  • signing a contract to sell the home, or
  • signing a contract of sale to purchase a house, or
  • purchasing or signing a contract to purchase a block of land to construct a house on, or
  • signing a contract with a builder to construct or rebuild a house, or house and land package, or
  • contracting or accepting a quotation from a tradesman to undertake repairs or renovations.

The income support recipient will be required to provide some documentary evidence (when the extended exemption period is being requested) to satisfy they have been making reasonable attempts.

Example: A copy of the agreement/acceptance of quotation to purchase, build, repair or renovate a new home.

Exception: In special circumstances an income support recipient may be considered to be making reasonable attempts if they have been unable to enter some form of an agreement. These circumstances include where the income support recipient has:

  • experienced delays relating to the rebuilding, repair or sale of the home, or purchase or construction of a new principal home,
    • Example: Gaining building approval from the local shire council which is required prior to entering into a contract with a builder.
  • been absent from the place they intend to rebuild, repair or sell the home, or purchase or construct a new principal home due to reasons beyond their control,
    • Example: Caring for a close family member in a separate location to the place where they were to rebuild their new principal home.
  • had changes in health that have had a major bearing on the individual's circumstances,
    • Example: Being hospitalised for an extended period.
  • been unable to gain a commitment/enter into an agreement with a builder because demands in the building industry are stretched in a particular area.
    • Example: After a natural disaster.

The income support recipient will be required to provide some documentary evidence for special circumstances to apply.

Example: A copy of correspondence from the local shire council.

Making those attempts within a reasonable period

An income support recipient must have made these attempts within a reasonable period after receiving insurance or compensation payments.

Explanation: The income support recipient must have taken action towards entering into some form of agreement to rebuild, repair or sell the home, or purchase or construct a new principal home within 6 months from the date of the sale.

Taking action could include: plans being developed by an architect or draftsman, gaining quotes from builders, attending open houses, contacting real estate agents on house and land packages available.

The income support recipient may be required to provide some documentary evidence (when the extended exemption is being requested) to satisfy they have been making attempts within a reasonable time period.

If an income support recipient has NOT made attempts within a reasonable period, i.e. 6 months from receiving insurance or compensation payments, the extended exemption CANNOT apply.

Example: Jack's home was damaged by a fire in January 2007. Jack received an insurance payment in March 2007. Jack decided to sell the damaged home and made an agreement with a real estate agent to put the home on the market in December 2007. Jack had taken no action prior to that date. In this case, Jack did not make attempts within a reasonable period (6 months) after receiving the insurance payment. Therefore Jack cannot gain access to the extended exemption.

Experienced delays beyond their control

An income support recipient would be considered to have experienced delays beyond their control IF they have been unable to commence or complete the purchase, construction, repair, or renovation of their home due to delays in the building industry.

Example: Mr and Mrs Smith's home was destroyed by fire in October 2007. They commenced gaining quotes from builders in March 2008 and signed a contract with a builder in August 2008 for the building to be completed by January 2009. The builder experienced delays and the home was only partially complete by January 2009. The builder estimates the home will be completed by March 2009. In this case, given Mr and Mrs Smith:

  • made reasonable attempts (i.e. signing a contract with a builder within 12 months),
  • made those attempts within a reasonable period (commenced gaining quotes within 6 months), and
  • experienced delays beyond their control (developer and builder delays),

they would gain access to the extended exemption for the period of October 2008 to the end of March 2009.

Determining a time period for the extended exemption

A time period for the temporary vacation (home lost or damaged) exemption should be determined. This time period should be in line with when the income support recipient anticipates, or the contract stipulates, the purchase, construction, rebuilding, repair or renovation of the building (including the principal home) or plant will be complete.

If the income support recipient's building (including the principal home) or plant is still not complete the time period for the temporary vacation can be further extended provided the criteria continues to be met and the overall timeframe does not exceed the total allowable 24 month exemption period.

The extended temporary vacation (home lost or damaged) exemption period should end when either of:

  • when a new principal home is purchased, or the building, rebuilding, repair or renovation of the new principal home is complete, or
    • Example: The final progress payment has been made and the certificate of occupancy has been issued.
  • the determined extended time period expires,

whichever comes first.

Act reference: SSAct section 11A(9) A residence of a person…

Policy reference: SS Guide 4.6.3.70 Exempting the Principal Home - Care Situations

Income support recipient temporarily resumes occupancy

If an income support recipient resumes occupancy of the home within 12 months and subsequently vacates the home, a new 12 month exemption period begins. Care should be taken to ensure that the income support recipient has resumed LIVING in the home and is NOT establishing a brief period of residence to extend the exemption period.

Principal home sold during the temporary absence

If the income support recipient, or their partner, sells the principal home during the exemption period and intends to apply the proceeds to purchase, build, rebuild, repair or renovate a new principal home, and as much of the proceeds that will be used for the new home is not counted as an asset for a further 12 months. The income support recipient remains a homeowner throughout the exemption period.

From 1 July 2007, IF the income support recipient has not been able to purchase, build, rebuild, repair, or renovate a new principal home within 12 months, the principal home sale proceeds CAN be exempt from the assets test for up to 24 months, subject to the person meeting certain criteria. The income support recipient remains a homeowner throughout the exemption period.

SS Guide 4.6.3.80 discusses the criteria.

Act reference: SSAct section 11A(9) A residence of a person…

Policy reference: SS Guide 4.6.2.10 General provisions for exempt assets, 4.6.3.10 General Provisions for Assessing the Principal Home

Last reviewed: 3 January 2017