Do you want to be a Grey Nomad?

Do you want to be a Grey Nomad?

If you are thinking of travelling during retirement and want to rent out your home while you are away? There is a bit more to think about for those looking to apply or are already on a pension.

If you plan to vacate your home, not live in it within 12 months, and want to rent it out, you may be affected by both the asset test and the income test. This may reduce or eliminate a person’s pension.

Pension general requirements

To obtain a pension you generally must be:

• of pension age,

• under the income and assets test limits, and

• an Australian resident for at least 10 years.

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Asset Test

The pension asset test looks at what you and your partner own. The total value of these assets will determine the pension rate available. Assets include investments, home contents, vehicles, and real estate. While real estate is included in the asset test, a person’s principal home (the home a person usually lives in) is not included.

When a person leaves their home but intends to return, the time away is generally considered a temporary absence. However, after 12-months of being away, a home is not considered as the principal home and will become an asset for pension purposes even if the person intended to return after 12 months. If this happens, then the value of the home may affect the amount of pension a person can claim.

Income test

The income test looks at all income being made by a person and their partner.  This includes wages, deemed income from superannuation, investments, and income from renting out real estate, including a principal home. Therefore, renting out your home to travel as a grey nomad may affect your pension.

If you need any further advice about these matters please give our estate planning team a call on 9870 9870.