The short answer is two years but in certain special circumstances, it can be extended to three years.<\/p>\n
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In late 2022, the government made significant changes to the way the proceeds of your home are treated for calculating your pension.<\/span>Credit: <\/span>Simon Letch<\/cite><\/p>\n In late 2022, the government made significant changes to the way the proceeds of your home are treated for calculating your pension while you are waiting to buy or build your new home. The changes apply to people who have sold their home since 1 January 2023 and affect both the assets test and income test.<\/p>\n Under the assets test, the proceeds of the sale of your home that you intend to use to purchase or build a new home will have an exemption period of two years (previously it was one year). For people with extenuating circumstances, this exemption can be extended by an additional year, taking the maximum exemption period to 3 years.<\/p>\n Under the income test before January 1, the money that was going to be used for your new home was included together with your other financial assets. Income was then assessed on the combined total using the deeming rates, currently they are 0.25 per cent for the first $60,400 (single) $100,200 (couple) and 2.25 per cent on the assets above.<\/p>\n For people who have sold their home since January 1 this year only the lower deeming rate (0.25 per cent) applies to the proceeds that will be used for your new home.<\/p>\n My friend recently downsized to a retirement community. She owns her home, but Centrelink are paying her rent assistance on top of her pension. How can this be?<\/strong><\/p>\n Aged-care guru Rachel Lane says that it sounds like your friend has downsized into a land lease community (sometimes called a lifestyle village or over 50s). In these communities, you own your home but lease the land on which it sits, the rent is called \u201csite fees\u201d.<\/p>\n Because of this ownership structure, your friend can claim rent assistance on the site fees of up to $185 per fortnight on top of her pension. These rules sometime cause confusion for people who have downsized to a retirement village. In retirement villages, most contracts are a leasehold or licence arrangement, and residents of retirement villages normally only qualify for rent assistance if their purchase price is $242,000 or less.<\/p>\n We have been married for 30 years, but when we bought the family home 12 years ago, it was put in my name only for asset protection purposes. It was rented out for four of the 12 years of ownership. Are we eligible to make a downsizer contribution in both names or in just one name?<\/strong><\/p>\n For downsizer contributions, each member of a couple must be assessed individually on whether they are eligible for a full or part CGT main residence exemption on the disposal of the property. Where only one person is on the title, the other person will be taken to be on title for this purpose, however, only the person(s) who has lived in the property at some stage can make a downsizer contribution using the sale proceeds.<\/p>\n As you have both lived in the house, and assuming the other downsizer conditions have been met, then you are both eligible to make a downsizer contribution.<\/p>\n Our family home is worth about $4.5 million, and we intend to downsize to a property worth around $1.5 million. We are in our 60s and have about $1.5 million each in superannuation. Can we make a downsizer contribution as well as a superannuation contribution?<\/strong><\/p>\n You can make non-concessional contributions until age 75 without passing the work test as long as your total superannuation balance is under $1.9 million. The downsizing contribution is limited to $300,000 a person and does not depend on your age or your superannuation balance at the time you make the contribution.<\/p>\n Therefore, it\u2019s important you make the contributions in the right order – if you made the downsizing contribution first your total super balance could be over $1.9 million, and you may not be eligible for a further contribution.<\/p>\n Using the bring forward rule you could contribute $330,000 as a non-concessional contribution first, and after that transaction is completed, you could then make a downsizer contribution. Make sure you seek advice as this can be complex.<\/p>\n Noel Whittaker is the author of Retirement Made Simple<\/em> and other books on personal finance. Email: noel@noelwhittaker.com.au<\/strong><\/p>\n