6.1.2.40 Reviews - Sale of Home & Temporary Absence from Principal Home

Summary

This topic explains reviews associated with the sale of, and temporary absence from, an income support recipient's principal home, including change of address reviews. This topic covers:

  • sale of principal home reviews - general,
  • sale of principal home reviews - departure overseas,
  • change of address reviews,
  • temporary vacation of principal home reviews,
  • care situation absence from principal home reviews, and
  • new exemption period for income support recipients entering or providing care.

Information on review of the value of real estate is in the referenced topic.

Act reference: SSAct section 11A(1) Principal home

Policy reference: SS Guide 6.1.2.50 Reviews - Business, Sole Traders & Partnerships

Sale of principal home - general

When an income support recipient sells their principal home:

  • any portion of the proceeds likely to be used to purchase a new home is disregarded for assets (1.1.A.290) test purposes for up to 12 months after the sale, AND
  • income is deemed on the proceeds of the sale if the proceeds are held in the form of a financial investment.

Exception: Investment income is NOT assessed if the invested amounts were received because the home was:

  • destroyed, OR
  • demolished, OR
  • damaged.

Act reference: SSAct section 8(1)-'income'

Extension of exemption

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 income support recipient meeting certain criteria.

Where the asset value is exempt for the 12-24 month period, it continues to be subject to deeming rules during the asset exemption period if the proceeds are held in a financial investment.

An income support recipient meeting the exemption conditions is considered to be a homeowner during the exemption period.

An automatic review should be set for:

  • 10 months after the sale,
  • 6 weeks before the extended exemption date expires (for those income support recipients eligible for the extended exemption period), OR
  • earlier, if an income support recipient advises that a purchase is finalised sooner.

Act reference: SSAct section 8(1)-'income', section 8(8) Excluded amounts - general, see (m)

Policy reference: SS Guide 4.6.3.10 General Provisions for Assessing the Principal Home, 4.6.5.30 Assessing Property, Real Estate & Unit Trusts, 4.6.3.80 Exempting the Principal Home - Sale Proceeds (from 01/07/2007)

Sale of principal home - departure overseas

An income support recipient's pension should be SUSPENDED when they:

  • apply to have their pension paid overseas, AND
  • sell their principal home, AND
  • it is clear that the increased income or assets (1.1.A.290) would only preclude payment for a short time (see example), AND
  • reassessment would NORMALLY result in the pension being cancelled (see explanation).

Example: The income support recipient advises of an intention to purchase a house overseas.

Explanation: A pension, once cancelled, CANNOT be regranted during an absence from Australia (1.1.A.320).

The income support recipient MUST advise Centrelink when the circumstances affecting their entitlement stabilise. Payment should remain suspended pending review for restoration or cancellation depending on the circumstances of individual cases. Pension is cancelled IF the purchase of a new house overseas:

  • has not been finalised within 12 months or within 24 months if the extended exemption period applies, OR
  • is unlikely to be finalised within a further month, if a sale is in progress.

Change of address reviews

When a change of address is reported verbally to Centrelink, income support recipients should be asked whether the:

  • move is temporary or permanent, AND
  • income support recipient owned or rented the home, AND
  • if the income support recipient owned the home, whether it has been:
    • sold,
    • rented out, OR
    • left vacant.

Explanation: A change of address may affect the income support recipient's entitlement to RA, RAA or TAL.

All change of address details MUST be recorded in writing, even if the information appears not to affect entitlement, in case of a later appeal or the information is misleading.

Reviews should be noted to confirm or change payment of standard rate pension or benefit, if a married income support recipient moves to, or from, a:

  • psychiatric hospital, OR
  • other institution, OR
  • care situation (1.1.C.25).

Explanation: This includes nursing homes (1.1.N.140).

Temporary absence from principal home reviews

A review should be set for 6 weeks before the expiration of the one-year and/or the 24 months exemption period for temporary absences to determine whether an income support recipient expects to return to the principal home. The incomes support recipient should be advised of the consequence of the former home not being reoccupied.

Explanation: The higher assets exemption limit for non-homeowners applies, but the value of the former home is included as an asset.

The income support recipient's assets are verified in the review. An assessment is based on an income support recipient's estimate of the value of the former home and any other real estate item, UNLESS total assets, including the income support recipient's estimate, are within $20,000 of the assets limit. In this case, a valuation from a professionally qualified valuer should be obtained.

RA may be payable in limited circumstances if an income support recipient moves into temporary accommodation (1.1.T.50). The former home continues to be exempt for asset purposes.

Example: When people enter detoxification clinics, rehabilitation centres and similar institutions, to take up temporary education or training that is likely to enable the person to return to the workforce.

Policy reference: SS Guide 4.2.3 Pensions & benefits assets tests, 4.6.3.20 Determining Homeowners & Non-homeowners, 4.6.6.10 General Provisions for Valuation of Assets, 4.6.3.60 Exempting the Principal Home - Temporary Vacation of Property

Care situation absence from principal home reviews

A review should be set for 6 weeks before the expiration of the 2-year care-related absence to determine the current circumstances relating to the principal home.

Example: If the income support recipient retains the former home and rents it out, they may be entitled to further concessional treatment if they are liable to pay an accommodation charge or are paying some or all of an accommodation bond by periodic payments for their continuing residence in care situation. If they plan to sell the house at the end of the 2-year period, however, they need to provide details of the sale and the use of the proceeds from the sale.

New exemption period - income support recipients entering or providing care

An income support recipient who is temporarily absent from their home begins a new exemption period from the date they:

  • are admitted to:
    • a care situation, OR
    • residential care, OR
  • start providing a substantial level of care for somebody who is in a care situation.

Act reference: SSAct section 11A(9) A residence of a person is to be taken to continue…

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

Last reviewed: 11 August 2014