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Should you sell the family home when your parents move to an aged care home?

It's often a difficult decision for your parents to move to an aged care home.

The decision is made more difficult by the need to decide whether or not to sell the family home when they move out. Often these decisions are made for the parents by the child acting under an Enduring Power of Attorney.

Here are some options -

  • The family home will need to be sold if the move is to an aged care home where a bond is payable, to pay for the bond. Large bonds of $600,000 are common for aged care homes in Sydney.
  • The family home can be transferred to a child, a nephew or niece. If so, stamp duty must be paid on the value (regardless of whether it is a gift or it is paid for). No stamp duty is payable if you wait and the transfer takes place on death (there is no death duty in Australia).
  • The family home can be kept, and rented out, if the move is to an aged care home where no bond is payable. If so, the aged care costs must be funded.

The Commonwealth Government will pay the aged care costs, subject to a means test. Even if you qualify for a full pension, you may not qualify for aged care costs payments.

For instance, to satisfy the Centrelink rules for the aged care means test, the person cannot own, or cannot have owned a home within the previous 5 years (at least).

Why is this an issue? Without government assistance, aged care cost can exceed a full pension and must be funded by the person out of their own assets.

To find out more and how not knowing the Centrelink rules can lead to an unmitigated disaster, click - Attorneys transferring the principal's home to themselves must be careful

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