Completing the Real estate details MOD R 106-07110070

A person's 'principal home' is regarded as an exempt asset. This means that it is not included with other assets when applying the assets test. However, if the principal home is on more than 2 hectares of land, the land that exceeds 2 hectares may be an assessable asset.

A MODR (or equivalent in an online claim) will be required to determine a customer’s allowable house and curtilage exemption and to determine what portion of the property (if any) is to be assessed as an asset.

Curtilage is a term used to refer to the land around the principal home and can include garages and storerooms associated with the principal home.

From 1 January 2007, the assets test assessment for the principal home and curtilage has been restricted to the customer's house and surrounding land on the same title document. This is known as the single title rule. There are 2 curtilage tests used:

• 'private land use test' (the home and up to 2 hectares of land only, on the same title. Any land exceeding the 2 hectares is ‘excess curtilage’ and is an assessable asset)
• 'extended land use test' (the home and all the land on the same title, even if it’s greater than 2 hectares. Any land on a separate title is ‘excess curtilage’ and is an assessable asset)

A grandfathered savings provision for real estate will grandfather concessions for real estate for 2 groups of existing customers on payments before 1 January 2007 who would otherwise be disadvantaged by the application of the new one title rules. The saving provision will cease when the customer's payment is cancelled, for any reason, or if they leave the property after 1 January 2007

Note: A single (one) title can be made up of multiple lots.

Note: There are some exceptions to these rules. See Assessing house and curtilage link below

Information about the assessment and coding of House and Curtilage is contained in Assessing house and curtilage

Customer enters aged care on or after 1 January 2017

The former principal home will be an exempt asset under the assets test for two years after the customer vacates it to enter a care situation.

If a customer rents the former principal home out after entering into care, the net rental income from their former home is assessed as ordinary income and may affect the customer’s rate of income support payments.

The customer (and/or their partner) will be required to complete a MOD R if any of the following applies:

• The customer's principal home is on a property that is more than 2 hectares in area
• The customer's principal home is on more than one title
• Any or all of the customer's home property is used for commercial (business) purposes
• The customer owns any real estate other than their principal home in Australia or overseas
• The customer has entered aged care on or after 1 January 2017 and they are renting their former principal home

Note: if the customer (and/or their partner) has any interest in a private company or private trust which owns any real estate, the customer (and/or their partner) will need to complete a Module PC Private Company or Module PT Private Trust.

The MOD R collects information on property owned by the customer. Once the information is obtained an assessment can be done on the asset and income (if applicable) value of the property.

It is necessary for the customer to complete both parts of the MOD R, including the Authority to Inspect Your Property and to provide all requested documents to enable their claim or payment to proceed.

Services Australia also needs to determine if the customer (and/or their partner) is receiving any income from real estate. Income from real estate may be obtained from the letting, leasing or rental of a house, shop or land. For income test purposes, the current net income is taken into account. The customer should provide their latest tax return to determine the net income received from their real estate.

Points to note in completing the MOD R:

• All relevant questions on the module should be answered. Many questions only need a Yes or No tick and, depending on the answer, some questions may be skipped
• The module must be signed by the customer or authorised nominee
• Other documentation may need to be provided, including:
• rates notice
• certificate of title
• income tax return, depreciation schedule, profit and loss statement - if rental income received from the real estate
• evidence of mortgage or encumbrances on the real estate and associated loan documents
• water licences/titles (if applicable)
• A separate MOD R is required for each piece of real estate the customer owns

The Rural Property Questionnaire (Q454) is used in conjunction with the MOD R for medium to large farm properties. It collects additional information from the customer for the valuer, to enable them to more accurately value the property. Generally, if the property is operated as a commercial enterprise, then issue the Q454 in addition to the MOD R. The Q454 is not needed for smaller properties such as hobby farms with minimal farm improvements or bush blocks. Where the whole property is exempt because it is the principal home, or it is an exempt farm asset, do not issue a Rural Property Questionnaire for that property.