Want to sell your family home to downsize or move into aged care without the government slashing your Age Pension? There’s a little-known Centrelink rule that can help you keep more of your hard-earned money.
This clever trick gives you a two-year window to protect the proceeds from your home sale, stopping Centrelink from counting it in their assets test and reducing your pension. Here’s how it works.
The Hidden Rule to Save Your Pension
When you sell your main home, Centrelink won’t immediately count the sale money in their assets test, which decides how much pension you get. You’ve got two years (or three in special cases) to use that cash to buy a new home or pay for a retirement village without it affecting your pension.
For example, sell your home for $900,000 and use $700,000 for a retirement village? Only the leftover $200,000 gets counted in the assets test during that two-year grace period. The $700,000 is assumed to earn a tiny 0.25% interest rate for the income test, adding just $1,750 a year to your assessed income. That deeming rate could change, but for now, it’s a small price to pay to keep your pension intact.
Don’t get caught out
This only works for your primary residence. Sell an investment property or holiday home? Sorry, the proceeds go straight into the assets test, potentially cutting your pension. Plus, if you still own your main home (and up to two hectares of land around it), it’s completely exempt from the assets test when applying for the Age Pension.
Beat the system with these new limits
Centrelink bumped up its income and assets test thresholds on 1 July 2025 to match inflation. Know these numbers to maximise your pension:
Income test
Assets test
Assets include cars, investments, super, businesses, and properties (but not your main home).
It’s YOUR money
This two-year exemption is your shield against Centrelink taking a big chunk of your pension just because you sold your home. It gives you time to downsize or settle into aged care without handing over your hard-earned savings to the government’s means tests. Use this loophole wisely to keep more money in your pocket.
Always double-check with Centrelink, as rules and rates can change.
Thank you for this information. It is very helpful.
I have a question.
If I decide to sell my house and buy a new home to live in and include my son and daughters name on my new home. Will this affect my pension?