Selling the family home
Downsizing your home
By the time you are considering retirement, it is likely that
you will have substantial equity in your home. You may even own
your house outright. Selling the family home is one way to free up
cash for retirement. The money you receive can be invested in
shares, term deposits, managed funds or superannuation.
In addition to finding a place to live, there are many
financial, practical and emotional factors to consider before
putting up the 'For Sale' sign.
The impact on social
Your age pension depends on what your assets are worth (the assets test). Selling your home may have an
impact on the amount of social security benefits you receive.
Your home and the 2 hectares surrounding it are not counted in
the assets test. If you sell your home, the proceeds will be exempt
for up to 12 months, as long as you are planning to use the money
to buy another home. However, the proceeds will be deemed under the
If you sell your home and buy a cheaper one, the surplus cash
will be counted in the assets test. It's best to speak to a
Department of Human Services Financial Information
Service (FIS) officer for more information.
Case study: Lee Lin sells the family home
Lin is 67 and divorced. She decided to sell the family home after
her children moved out because it was too big. She expected to sell
her old home for $600,000, buy a cheaper apartment for $400,000 and
have $200,000 left to invest.
Before she put her house on the market, she went to Centrelink
and asked how the sale would affect her age pension. The FIS
officer told her that the $200,000 would be counted towards the
assets test for her age pension. Lee decided she was still better
off downsizing, even though it would reduce her pension
Alternatives to selling
Selling the home where your children were raised and leaving
behind neighbours and friends can be difficult and stressful. Add
to that the challenges of relocating to a new area, moving into a
smaller space and making new friends. Suddenly, staying put might
seem like a good idea.
Here are some alternatives to selling your home:
- Think about converting your home to dual occupancy so you can
live in one half and rent or sell the other half
- Rent out some rooms (this has tax implications and may affect
your age pension so seek financial advice before you proceed)
- Consider a reverse mortgage if you need extra
cash and have solid equity in your home
If you intend to stay in your house for the long term, you
should consider renovating your home to ensure it is safe and
easier to move around as you get older. My aged care website has
information on getting help to stay in your own home so you can
maintain your independence for longer.
What to do next
After you've sold your house, you may have money to invest in
other income-producing assets. There are lots
of options available so seek financial advice on the best mix of
investment products for your needs.
Selling the family home is not an easy or simple
decision. Before you do anything, consult a financial adviser on
the tax and social security implications, and speak to family and
Last updated: 15 Jul 2016