Home property adjustment amount and apportionment calculations on entity owned residence 043-04060020

A Special Disability Trust (SDT) may own real estate that is the principal beneficiary's home. It is not necessary to determine if the principal beneficiary is a homeowner for a SDT. The home and curtilage is an exempt asset.

When a customer occupies a house owned by a private company or trust and is an attributable stakeholder they are considered to be a homeowner. A customer may be considered a homeowner even if they are not an attributable stakeholder of the private trust or private company. This will be the case if the customer has a right or interest in their accommodation that gives them reasonable security of tenure.

The term house and curtilage describes the portion of real estate which is not assessed for Assets Test purposes. It is considered the home of the customer. A common example is where the real estate is a farm on which the customer's home is situated. For Assets Test purposes the farm portion may be considered an assessable asset. If the customer owns the property directly or indirectly as part of a private trust or private company, the value of the house and curtilage is subtracted from the gross value when determining the assessable assets amount of the private trust or private company.

Since 1 January 2007, for all new claims the Assets Test assessment for the principal home and curtilage has been restricted to the customer's house and the adjacent land on the same title document. This is known as the single title rule. There are now two curtilage tests used to determine a customer's allowable house and curtilage concession, a private land use test and an extended land use test. Note: a title document may have more than one parcel of land included.

A grandfathered savings provision for real estate will grandfather concessions to two groups of existing customers on payments continuously prior to 1 January 2007.

The savings provision will cease when the customer's payment is cancelled for any reason, or if they leave the property.

This also applies to customers whose home is held in a private trust or private company structure. Where a private trust or private company owns a property there may be more than one house and curtilage amount. For example, the private trust or private company may own a farm on which there are two or more houses each owned by different controllers who are income support payment customers.

Where an asset includes the house and curtilage of a controller (that is, the controller resides in the home), the house and curtilage portion will not be considered to be an asset of that controller and a home property adjustment amount will need to be recorded and is subtracted from the controller's total net entity assets. If the property is also owned by another controller (who is not living in the house) then the value of the house and curtilage would be an assessable asset for that controller.

The home property adjustment amount is the value of the house and curtilage multiplied by the applicable attribution percentage. This is deducted from the controller's attributed value of the entire property.

If there are a number of stakeholders with different exempt assets (house and curtilage) on the property, then the Home Property Adjustment must be recorded for each stakeholder.

If a liability is held against the property (that includes the exempt house and curtilage), then the liability must be apportioned so that it is not offset against the whole property when some of the liability is actually for the exempt asset (for example, the house the controller is living in).

Where apportionment is required, the home property value will need to be reduced by the allowable portion of the liability before the applicable attribution percentage is applied.

If there is more than one home property, individual home property adjustment amounts will need to be calculated and applied for each controller.