Thinking of selling your home to afford aged care? Think again

One of the biggest misconceptions is that the family home is fully assessed for aged care fees. It’s not. When you move into aged care, the value of your home is only counted in the means test up to a capped value of $210,555. This cap can make a dramatic difference. Most homes are worth substantially more than the cap. If you have a $1.2 million home then the cap effectively exempts $1 million of it. If you sell the home and pay the RAD, all the money you put into the RAD is included in your aged care assets and any money left over counts towards your aged care and pension means tests. Selling the family home can feel like the simplest solution – but simple isn’t always smart. There’s a second consideration: your RAD is exempt from your pension assets test. If you keep your home, it’s not counted towards the pension assets test for two years after you move into aged care. If you are a couple, the clock only starts ticking when the second person leaves. However, there is a new piece of the puzzle – the exit fee on your RAD. Before November 1, paying a Refundable Accommodation Deposit meant exactly that: all of your money was refunded when you left. Now, there is an exit fee of up to 10 per cent if you stay for five years or more.