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Help for pensioners to downsize as government looks to free up housing

The government wants to lift the burden on pensioners seeking to downsize in order to free up homes for younger families.

HOUSING MARKET STOCK Retirees will have an extra year to buy or renovate a new home before their pension is impacted.
September 7, 2022
By Tess Ikonomou
7 September 2022

Pensioners wanting to downsize their home will have an extra year before their payments could be affected by asset testing in a bid to free up houses for younger families.

The Albanese government will on Wednesday introduce laws to enable the policy change to the lower house. 

The legislation will extend the assets test exemption to 24 months for principal home sale proceeds. 

The federal government is asking seniors to help with Australia’s housing crisis. (Brendon Thorne/Getty Images)

The additional 12 months will give retirees more time to purchase, build, or renovate a new home before the pension is impacted.

More than 8000 retirees moved into a smaller home in 2021, with the government hoping this figure will rise if the bill becomes law. 

Social Services Minister Amanda Rishworth said the legislation would benefit the thousands of pensioners opting to sell their houses.

“We don’t want people putting off downsizing to a more suitable home because they are concerned about the impact it could have on their payment rate and overall income,” she said.

ANTHONY ALBANESE SYDNEY PRESSER Any increase in JobSeeker payments will be assessed "budget by budget", Amanda Rishworth says.Bianca De Marchi/AAP PHOTOS
Social Services Minister Amanda Rishworth says the legislation will benefit thousands of pensioners. (Bianca De Marchi/AAP)

“These changes will give pensioners more flexibility to find a suitable new home and it will hopefully free up larger housing stock for younger families who need it.”

Changes include slashing the deeming rate for the money from sales to be used for a new residence from 2.25 per cent to 0.25 per cent a year.

Pensioners intending to use the proceeds from selling their home to purchase or build another home are currently only exempt from the social security assets test for up to 12 months.

But a one-year extension is available for unforeseen circumstances, including a natural disaster.

A ‘sold’ real estate sign is seen outside a high-rise apartment block in Sydney. (Lisa Maree Williams/Getty Images)

During the exemption period only the lower deeming rate (0.25 per cent) will apply to these sale proceeds in the income test.

The government previously committed to freezing deeming rates at their current levels for two years, to June 30, 2024.

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