Legislation passed in Parliament today will reduce the financial impact on pensioners looking to downsize their principal home and free up housing stock for younger families.
The Social Services and Other Legislation Amendment (Incentivising Pensioners to Downsize) Act 2022 will benefit thousands of pensioners and other income support recipients each year – including eligible Veteran entitlement recipients – by reducing the impact of selling and buying a new family home on income support payment rates.
The Albanese Labor Government today secured its passage through the Senate.
It means from 1 January 2023 the existing 12-month asset test exemption for principal home sale proceeds a person intends to use for a new home will be extended to up to 24 months.
In addition, deemed income on the exempt proceeds will be calculated using only the lower deeming rate – currently 0.25 per cent.
These changes will give recipients more time to purchase, build, rebuild, repair or renovate a new principal home, without the worry of significant impacts on their payment rate while they are staying in a temporary residence.
It will also have the aim of freeing up larger housing stock for younger families who need it.
The Government has separately committed to freezing the deeming rates at their current levels until June 2024.
Minister for Social Services Amanda Rishworth said it was important pensioners who wanted to downsize were not held back from doing so.
“More than 8000 income support recipients took advantage of the existing 12 month asset test exemption last year,” Minister Rishworth said.
“By giving people more time to purchase or build a new home, more pensioners who want to downsize will be incentivised to do so, freeing up the equity in their home and enhancing their retirement lifestyle.”
This will provide real support to older Australians facing cost of living pressures, and is another way the Government is taking action to provide relief for Australians.
An additional 12-month assets test exemption is still available in extenuating circumstances.