Browse Forums Real Estate 1 Jul 23, 2010 8:24 pm Alright, probably nobody knows anything about this, but firstly, before I get into my actual question, does anyone have any familiarity with the NSW Aged Pension rules with regard to buying property? BRIEFLY, my mother in-law intends to sell her home in rural NSW and move to rural QLD where she will have a little granny flat on her son's land. The son has a house on it and they're going to build this granny flat at some point for my mother in-law to move into. My mother in-law will be giving them say, half the money from the sale of her place, to go towards this granny flat. She wants to give the other half to my partner, to be fair and equal, and this would be FANTASTIC because then we could look at a different, higher price range, in our own house hunt!! SO USEFUL! BUT. Apparently if you "gift" more than $10,000 to a relative, you lose your pension. Or something. There are conditions and I'm not sure exactly how they'd affect my mother in-law's specific pension, if they do at all. If anyone knows anything, let me know! I've emailed some places but nobody knows, and the actual government only wants to speak over the phone but I don't want to. I can't organise my thoughts properly on the phone and want stuff in writing. lol How the hell did I become a senior member!? I know nothing! Re: Property & Aged Pensions 2Jul 23, 2010 8:47 pm Hi grace, I'm definitely not an expert in this, but from what I've read (for my MIL) she wouldn't neccessarily lose the pension, but have it reduced for a few years (5 years from the date that she "gifts" something) If it is a large enough amount, then she may lose her pension. The 1st $10,000 she is allowed to gift for free in a financial year, and then anything after that...I think her pesion is calculated as though she was still earning an income from that money and reduced accordingly. And she can only gift $30,000 in a 5 year period. These links may help... http://www.centrelink.gov.au/internet/i ... 0809en.pdf http://www.centrelink.gov.au/internet/i ... ispose.htm Maybe the best bet is for you to go into centrelink and discuss it with someone. I'm sure they'd explain it to you. It's never as simple as we would like though is it??? 'chelle We have a hand-over date...15/10...but I won't hold my breath! http://people-in-glass-houses.blogspot.com/ Re: Property & Aged Pensions 3Jul 23, 2010 8:51 pm Hi grace_slick, First of all the Age Pension is funded through the Federal Governments Social Security system; thus the rules are the same no matter where a person lives within Australia. What your mother in-law intends to do is perfectly normal, however some aspects could have a serious impact on her Age Pension entitlement. I'll start with the 'granny flat' side of things first. If your MIL gives your brother in-law money in exchange for accommodation (a life interest) then Centrelink will generally exclude the amount paid for said accommodation when applying the Asset Test to your MIL's pension entitlement (read the fact sheet here: http://www.centrelink.gov.au/internet/i ... fis027.htm ). Now, with regards to 'gifting' money, well Centrelink don't look at that quite so fondly. It's called depravation of assets, and essentially there a rules in place to ensure that pensions don't deprive themselves by giving all their money/assets away. And also, if there was no limit to what people could give away then the work-force (taxpayers) would be left supporting countless pensions that had simply given there assets away in order to qualify for a full pension, but I digress. The gifting provisions allow for a single person to gift up to $10,000/ financial year, but not more than $30,000 in a rolling 5 year period. If you MIL were to give your hubby say $100,000 then centreline would still assess $90,000 of it as being your MIL's asset (the following year it would drop to $80k, then $70k for the reaming 3yrs until the end of the 5yrs from the date of original gift) - if that makes sense. (read the fact sheet here: http://www.centrelink.gov.au/internet/i ... fis012.htm ). The best advice though would be for your MIL to get in touch with a Financial Information Service Officer at Centrelink, who can sit down with her (and the family) and go through what the effects would be on your MIL's pension etc etc. You can speak with them on 13 23 00. Hope all this makes sense Re: Property & Aged Pensions 5Jul 23, 2010 8:57 pm But you explained it soooo much better than I did 'chelle We have a hand-over date...15/10...but I won't hold my breath! http://people-in-glass-houses.blogspot.com/ Re: Property & Aged Pensions 6Jul 24, 2010 8:28 pm Wow, thank you so much!! I actually went on the Centrelink website a while ago and found out about the $10,000 limit for one year, and the $30,000 rolling limit for 5 years, and all that. What I don't understand in my MIL's specific case is based on the following further info... 1. Right now, she is classed as a homeowner who is a couple but separated due to illness. So according to this, she's got a certain threshold of assets she can have. As I said, she earns NO income apart from the pension itself, and her property that she owns isn't included in the assets that count towards her threshold. 2. Once she sells her property, she will go into another category, the NON-homeowner... 3. She expects to get around $160,000 for the property. This amount will then be I THINK counted towards the assessable assets for the threshold. But her threshold is still WAY above this amount. 4. She intends, once the granny flat is built on her son's land (they build it, she pays them back once she moves there), to have her name on the title. So she will, once again, be a homeowner and put into another category of asset threshold, though again, her assets will be WAY lower than that threshold / limit. 5. THEN she will gift around $80,000 to my partner... So what I assume from all this is that there'll be no penalty from any of the above actions APART from the gifting to my partner. I know the $10,000 is ok to give, but the remaining $70,000 will attract penalty. But WHAT penalty exactly? This is what I don't understand. I read (I've forgotten specifics now though) that the amount beyond the allowed $10,000 gifting amount (so in this case, $70,000) is added to the overall assets and the pension is then assessed accordingly. But in this case, it still wouldn't cause her assets to be above the threshold to make any effect on the pension amount / payment. But I then noticed that it said INCOME threshold, not ASSETS threshold, so THEN I was confused as to how they'd work that out. She HAS no income...so would they view the $70,000 as her income for that year, and so clearly she'd get NO pension cause you can't earn over $200 a fortnight or something? Or would they somehow work out the interest she COULD earn from that excess $70,000, and THAT is what they'd re-assess her pension payment on? Cause if that's the case, again, it wouldn't affect it cause on $70,000, you don't earn enough to go over the income threshold. Confused anyone? lol How the hell did I become a senior member!? I know nothing! Re: Property & Aged Pensions 7Jul 24, 2010 9:55 pm Hey grace_slick, The extra information is excellent. Essentially if you're MIL and FIL are classified as being 'illness separated' they are each entitled to the single rate of pension, being 701.10 a fortnight (each) compared with the couple rate which is $528.50 (each). With regards to the 'illness separated' asset test however, the allowable limit is the same as regular couples, however the cut-off point is higher (due to the higher rate of pension being paid). If you MIL & FIL's combined assets are below the threshold (which for Non-homeowners is $389,500) then there will be no effect to their pensions regardless of how much they 'gift'. As for the income test illness separated couples are able to earn up to $256 per fortnight before their pensions would be affected. In your relatives case, Centrelink would 'deem' an income from any financial assets they hold (savings, shares, managed investments or alike) - the deeming rates for couples are 3% on the first $72K, and 4.5% thereafter. For the income test to have any effect your MIL & FIL would need to have in excess of $170k in financial assets (including the amount gifted to your hubby). Also, there isn't much point in your MIL having her name on the title as Centrelink do not require any legal documentation as evidence, and will accept a statement (letter) from the parties involved (your MIL and BIL) that simply outlines the agreement and sum paid. (hope this makes sense) - it's easier to explain this orally Re: Property & Aged Pensions 8Jul 25, 2010 3:51 pm YAY!!! I thought this was the case (sort of). WOO! SO happy! This is of course IF she definitely decides to sell her place and move up to her son's place, and IF she even wants to gift any money to my partner anyway. But it's great to know she can. THANK YOU SO MUCH!!! How the hell did I become a senior member!? I know nothing! You might be able to apply to divert the sewer at your expense. In NSW you would contact a Water services co-ordinator and they would give you advice as to whether or not… 1 16145 Ask for some kickplate to be added and also for tradies to be requested to use lanyards on tools on that side of the building. Be respectful and have the discussion… 1 1689 The setback from the kerb is 4m. It is council land to provide an area for services like sewer main, gas mains, water mains, underground power or poles for overhead power,… 4 2394 |