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An income support recipient's principal home (section 11A(1)) MAY continue to be an exempt asset (1.1.E.170) when they are in a care situation (1.1.C.25).
This topic discusses:
Act reference: SSAct section 11A(1) Principal home, section 4(7) Illness separated couple
The care situation provisions apply to income support recipients in:
An income support recipient MAY be in a care situation even when they are a carer (1.1.C.15).
Act reference: SSAct section 11A(9) A residence of a person…, section 23(4CA) For the purposes of this Act, a person is in residential care...
Policy reference: SS Guide 4.6.3.20 Determining Homeowners & Non-Homeowners
If an income support recipient vacates their principal home to enter a care situation, the home continues to be an EXEMPT asset (1.1.E.170) under the assets test for a 2 year period. This provision applies irrespective of whether an income support recipient intends to return their principal home.
If, after 2 years, an income support recipient has not returned to their principal home the:
Exception 1: An income support recipient's principal home can also be exempted for:
Explanation 1: The resident does not have to be actually paying the charge.
Example: The resident may have chosen to defer payment and have it recovered from their estate.
Exception 2: From 1 July 2005, an income support recipient's principal home can also be exempted IF:
Explanation 2: There is no purpose test to this rental exemption. This means that:
An income support recipient CAN live in multiple care situations during the 2-year exemption.
Explanation: A new 2 year exemption period does NOT begin if an income support recipient moves from one care situation residence to another.
When an income support recipient moves from a care situation where an accommodation charge or accommodation bond is not payable (such as community based care) into residential care where an accommodation charge or accommodation bond is payable a new exemption period for the principal home may apply.
Explanation: If the income support recipient is liable for an accommodation charge or is paying some or all of their accommodation bond by periodic instalments and rents the former home, a new exemption period starts.
The 2-year principal home exemption is NOT interrupted IF an income support recipient is temporarily absent from the care situation. This provision applies even if an income support recipient resumes living in their principal home.
Explanation: A new 2 year exemption does NOT start when the income support recipient re-enters the care situation.
For a single pensioner in a care situation, if the principal home is sold during the exemption period, the proceeds are immediately assessable under the assets and income tests. See the table below for the treatment of couples.
Explanation: The exemption is a continuation of the exemption from the assets test of the income support recipient's former home. Even when there is an intention to occupy a property to be purchased with the proceeds of sale, the new property CANNOT satisfy the exemption provision of being the income support recipient's former home.
Policy reference: SS Guide 4.6.2.10 General Provisions for Exempt Assets, 4.6.3.10 General Provisions for Assessing the Principal Home
A couple is considered to be an illness separated couple where they are unable to live together in their home, and their inability to live together is due to illness or infirmity of either or both of them, which results in their living expenses being greater or are likely to be greater than otherwise, and the situation is likely to continue indefinitely. Home ownership status for both partners is derived from the partner residing in the home property. The following table explains how to assess the principal home for illness separated couples.
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If the partner living in the principal home… |
Then the… |
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remains in the home, |
principal home is an exempt asset under the assets test. |
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vacates the home to enter a care situation, |
2-year exemption applies to both partners from the date of the later entry to a care situation. Note: Exemption period may be extended under exceptions 1 and 2. |
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vacates the home temporarily for a reason that is not care or illness related, |
2-year exemption applies from the date of the first partner's entry to the care situation. The remaining partner's 12-month home exemption for the temporary vacation applies concurrently. The date from which the exemption ceases to apply is generally the later of: - the 2 years from the first partner's date of entry to the care situation, OR - 12 months from the remaining partner's date of temporary vacation. Note: Exemption period may be extended under exceptions 1 and 2. |
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sells the home with the intention of purchasing, rebuilding, repairing or renovating a new home within 12 months, or up to 24 months if certain criteria are met, |
homeowner status continues. Proceeds of sale are exempt from the assets test but subject to deeming for up to 12 months, or up to 24 months if certain criteria are met. SS Guide 4.6.3.80 Exempting the Principal Home - Sale Proceeds (from 01/07/2007) |
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sells the home and does not intend to purchase another, |
couple is treated as non-homeowners. Proceeds of sale are immediately assessable under the assets and the income tests, and the increased non-homeowner assets threshold will apply. |
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dies, |
2-year exemption applies to the person in the care situation from the date of the partner's death. Note: Exemption period may be extended under exceptions 1 and 2. |
Act reference: SSAct section 11A(9) A residence of a person…
Policy reference: SS Guide 2.2.5.60 Determining an Illness Separated Couple, 4.6.4 Assessing Special Residences & Aged Accommodation, 4.6.2.10 General Provisions for Exempt Assets, 4.6.3.10 General Provisions for Assessing the Principal Home, 4.6.3.20 Determining Homeowners & Non-Homeowners, 4.6.3.60 Exempting the Principal Home - Temporary Vacation of Property
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Last reviewed: 1 September 2008
