Aged care – Selling or keeping your family home?



As we age


Australia has an aging population and aged care property decisions are silent battles for many families. As we progress through life, we take for granted the control we have over our lives. As children our parents control much of our lives but as we get older our autonomy and control increase.


As teenagers, we like to test our limits and as adults, we start to forge our own paths. Throughout life, we take for granted how many decisions we make and how important independence is. However, as we age, we slowly lose autonomy and our influence decreases.


When people reach their later years, they often have health issues and they may require family to assist more. Further, as we age our circle of friends decreases and social isolation can be very frightening. These changes have a very real impact on the human psyche demonstrated by an increase in depression.


Some older people can no longer care for themselves physically and family may not be able to dedicate the time needed. Property owned by the older adult will also need ongoing maintenance and merely downsizing to a unit is not always an option. Leaving friends and neighbours, more steps, no income to pay for ongoing strata fees, etc are not appealing or viable for many. Aged care may be the only practicable option and the initial points to consider pertain to payments.


Should you and your family decide that aged care is the best choice there are some standard details that you can discuss.


Choices for the family home


Apart from the emotional decisions relating to leaving the family home, there is the fundamental issue of cost. Clearly, the accommodation payment is the biggest cost. There are options for payment as either a bond or lump sum up-front, which is refundable (called a Refundable Accommodation Deposit, or RAD) daily amount (called a Daily Accommodation Payment, or DAP) combination of RAD and DAP.


You may be thinking of selling the family home to pay the bond (RAD). Or maybe you’re wondering whether it’s better to rent it out to help pay the daily amount (DAP).


You have 28 days after you go into aged care to decide how to pay for your accommodation. You must pay the DAP until the RAD is paid:


  • if you decide to pay a RAD within those 28 days, you have 6 months to pay the RAD


  • if you decide to pay a RAD after those 28 days, it is due as agreed between you and the provider


You may need professional financial advice to work out whether selling or renting your home is the best option. Either way, be aware that what you choose to do with the family home may affect the Age Pension assets test.


  • if you sell the home, its value will count towards the Age Pension assets test and


  • if you rent out the home, its value may count towards the Age Pension assets test, depending on when you moved into aged care.


If you keep the home without renting it out, it is exempt from the Age Pension assets test for two years from the date that you moved into aged care. (This may vary if you are, or were, a couple when you moved into aged care.)


Final thoughts


The most important point is that many older people are frightened by a change they have little say in. We should all care and empathise with this transition because it is not simply practical but deeply emotional. It is perhaps even more sensitive if it is the final large decision made.