As the cost of housing continues to climb, many retirees are exploring shared homeownership as a way to afford living in prime locations. But for Age Pension recipients, the big question remains: Will co-owning a home affect pension entitlements?
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Robyn, a pensioner from country Victoria, is considering buying a house in Melbourne with her long-time friend, but she’s concerned about how this decision could impact her Age Pension eligibility. Let’s break down the implications and what pensioners need to know before making a move.
Robyn’s Situation: Can She Buy a Home with a Friend Without Losing the Pension?
Robyn and her friend, both in their 70s and on full-age pensions, want to move closer to their grandchildren in Melbourne. Since neither can afford a home on their own, they are considering purchasing a property together as ‘tenants in common’—each owning a share of the house while maintaining financial independence.
To ensure long-term security, they plan to include a legal agreement in their wills, allowing the surviving party to continue living in the home until they pass away or choose to sell.
How Will Centrelink Assess Their Shared Home Purchase?
✅ If the Melbourne house becomes their primary residence, it will be exempt from the Centrelink assets test, meaning their pension won’t be affected.
✅ If they sell their current homes to fund the new purchase, only the leftover proceeds from the sale (after buying the new property) will be assessed under the income and assets test.
⚠️ If they keep their original homes as investments, these properties will be counted as assets, which could reduce their pension payments.
Key Considerations for Pensioners Sharing Homeownership
📌 Legal Protection: Ensure clear legal agreements on ownership shares and living arrangements.
📌 Centrelink Assessment: Any savings or surplus funds from the sale of existing properties may impact pension payments.
📌 Estate Planning: Having a legally binding will can protect both parties’ interests in case of unforeseen circumstances.
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Final Thoughts: Is Shared Homeownership a Smart Move for Pensioners?
For retirees struggling with rising housing costs, buying a home with a friend can be a smart way to secure quality housing without financial strain. As long as the property remains a primary residence, Centrelink’s pension eligibility rules should not be significantly affected.
However, seeking financial and legal advice before making the move is essential. A meeting with Centrelink will provide personalized guidance on how shared ownership may impact individual pension benefits.
Would You Consider Sharing a Home in Retirement?
Have you explored co-ownership as a retirement housing option? Share your thoughts and experiences in the comments below!
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