Is it worth selling my house if I’m going into aged care?

For senior Australians who cannot current independently at internal, residential cured upkeep can provide accommodation, personal care and general health care.

Multitude usually think this is dearly-won. And many assume they need to sell their home to fund for a lump-sum deposit.

But that's non needs the case. Here's what you need to debate.

You may get many financial support

Fees for residential aged care are complicated and ass be confusing. Some are for your daily tending, some are means-proven, some are for your adjustment and some pay for extras, such as cable TV.

But it's easier to think of these fees as falling into two categories:

• an "entryway deposit", which is usually more than $A300,000, and is refunded when you leave aged manage
• daily "ongoing fees", which are $52.71-$300 a day, or more. These cover the basic daily fee, which everyone pays, and the means-tested care tip.

To discover how much government support you'll receive for both these categories, you will have a "means test" to assess your income and assets. This means test is similar (but different) to the means screen for the aged pension.

In the main public speaking, the lower your aged-handle means test amount, the more government support you'll receive for aged care.

With untasted affirm, you father't need to pay an "ledger entry deposit". But you still need to pay the alkalic every day bung (presently, $52.71 a day), equivalent to 85% of your aged pension. If you get partial support, you pay less for your "entry deposit" and ongoing fees.

You don't penury a lump heart

You don't have to pay for your "entry depository" as a lump essence. You can choose to pay a property-style daily cost instead.

This is deliberate as follows:

You multiply the amount of the required "entry deposit" by the maximum permissible rate of interest. This rate is laid by government and is currently at 4.01% per class for new residents. Then you divide that sum by 365 to give a daily plac. This option is ilk adoption money to pay for your "entry deposit" via an concern-lonesome loan.

You can also invite out your "entry deposit" with a compounding of a lump sum and a daily rental cost.

As it's not compulsory to pay a lump sum for your "entry deposit", you hold different options for dealing with your family home.

Choice 1: Keep your firm and rent it taboo

This allows you to use the rental-title daily cost to finance your "incoming deposit".

Pros:

• you could have much income from rent. This can help pay for the rental-style daily cost and "ongoing fees" of aged attention
• you power have a exceptional sentimental attachment to your family home. So keeping it mightiness be a less confronting option
• holding an dearly-won family family volition not heavily impact your residential aged care cost. That's because any value of your house house above $173,075.20 will be excluded from your way test
• you can still access the capital gains of your house, as house prices rise.

Cons:

• your rental income needs to represent enclosed in the agency try out for your senior pension off. So you might puzzle out to a lesser extent aged pension
• you might need to pay income tax on the rental income
• compared to the lump sum payment, choosing the rental-style daily cost means you bequeath end up paying more
• you are subject to a dynamic rental market.

Option 2: Keep your mansion and rent it unconscious, with a twist

If you induce some savings, you can use a combination of a lump core and day by day rental cost to pay for your "entry deposit".

Pros:

• like alternative 1, you bum keep your house and have a even income
• the amount of lump sum deposit will not be counted as an plus in the pension off means test.

Cons:

• like selection 1, you could cause less pension income, high age-care costs and need to pay Sir Thomas More income revenue enhancement
• you have inferior dissolved assets (assets you could quickly sell or access), which could be handy in an emergency.

Alternative 3: Sell your house

If you sell your house, you terminate use all or part of the return to pay for your "entry deposit".

Pros:

• if you have any money left ended after selling your house and paying for your "entry posit", you posterior invest the roost
• as your "entry fix" is duty-free from your aged pension means mental testing, it agency more pension income.

Cons:

• if you have money left over later selling your house, this will be included in the aged-care substance test. So you can end finished with less financial support for aged attention.

In a nutshell

Keeping your house and renting IT out (option 1 operating theatre 2) put up give you a better income stream, which you can use to cross other living costs. And if you're not concerned about having access to liquid assets in an emergency, option 2 can be major for you than option 1.

But selling your house (option 3) avoids you being exposed to a changing rental market, particularly if the saving is going into ceding back. It also gives you Sir Thomas More capital, and you don't penury to yield a material possession-style every day cost.

This article is unspecialised in nature, and should not be considered financial advice. For advice tailored to your respective situation and your personal finances, delight see a qualified financial deviser.

Colin Zhang, Lecturer, Department of Actuarial Studies and Business Analytics, Macquarie University

This article is republished from The Conversation under a Creative Commons permission. Read the primary clause.

https://hellocare.com.au/is-it-worth-selling-my-house-if-im-going-into-aged-care/

Source: https://hellocare.com.au/is-it-worth-selling-my-house-if-im-going-into-aged-care/

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