Assessing house and curtilage 108-04070030

The principal home and the private land (curtilage) adjoining the home may not be considered an asset under the assets test.

The legislation relating to the assets test assessment for the principal home and curtilage includes a single title rule, a private land use test and a concession known as the extended land use test or extended curtilage.

These curtilage concessions also apply to the principal home if it is held in a private trust or private company. The controller of the private trust or company is to be able to access the grandfathering title concession and the extended curtilage concession on the same basis, as customers who own their principal residence directly.

If subdivision has occurred, all titles that do not contain the principal home will be assessable. Note: do not code the Real Estate/Business Identifying (REBI) screen for titles already sold. Code the asset at the net market value.

• If the customer is advising of a sale of principal home, see Sale of principal home
• If the customer is advising of an update in value to house and curtilage already on their record, see Maintaining the value of real estate assets on customer records
• For overseas real estate, update the Foreign Income and Assets (FID) screen

Note: Water Rights are to be included in the value of the real estate on the Real Estate (RE) screen.

Is the customer's principal home on real estate of more than 2 hectares and/or is on more than 1 title document?

Note: a title document may contain more than one lot/parcel of land.

• Yes, go to Step 2
• No, this procedure does not apply. See:
• Assessment and sale of real estate and timeshare asset, or
• Determining homeowners and non-homeowners
• procedure ends here

Is the customer's principal home property on 1 single title document?

• Yes, go to Step 3
• No, go to Step 5

All new claimants from 1 January 2007, regardless of their payment type, are assessed under the single title rule. The curtilage amount that is exempt from the assets test is limited to the land on the same title document as the home. Where the private land use test applies the curtilage amount that can be exempted is a maximum of 2 hectares. Where the extended curtilage concession applies the curtilage amount that can be exempted is all the land on the same title document with no upper limit.

Note: a single title document may have more than one parcel of land included.

Grandfathered savings provision

There is a savings provision for real estate to allow adjoining titles to be considered curtilage if they were or should have been assessed as such immediately prior to 1 January 2007 under the prevailing policy. The savings provision will cease when the customer's payment is cancelled, for any reason, or the property ceases to be the home. Determine if the customer is better off on the new or old rules before removing the savings provision.

Note: only customers who meet this savings provision should have 'Grandfathered' recorded as the Curtilage Type on the RE screen.

If the principal home and adjacent land is on 1 title and it is over 2 hectares the whole property may be exempt from the assets test if all of the following criteria are met:

• The customer is Age Pension age and in receipt of or qualified for Age Pension, Carer Payment (CP) or Department of Veterans' Affairs Service Pension and the payment is payable.
  Note: where one partner qualifies for the concession, the customer's partner will also qualify, even if the other partner is a social security income support recipient or a Department of Veterans' Affairs income support recipient who is under Age Pension age or service pension age. If the relationship status should change in the future (for example separation or becomes a widow/widower) the partner's concession will be saved providing they continue to live in the home and are making effective use of the land
• The customer has had a long term 20 year continuous attachment to the land as their principal home (temporary absences of less than 12 months do not break the 20 year period)
  Note: for partnered customers, the Age Pension or Carer payment recipient of Age Pension age is required to be the person who has the long term (20 years or more) continuous attachment to the land, not the partner who is under Age Pension age or service pension age
• The customer is making effective use of productive land to generate income, taking into consideration their capacity to do so.
  Note: unlike the private land use test, this means there is no requirement that the land be used for private or domestic purposes. The Resources page provides additional information and examples of effective use of productive land

Does the customer meet the extended land use test?

• Yes, go to Step 8
• No, go to Step 5

Where the extended land use test does not apply, the private land use test is applied where the principal home and adjacent land are:

• on 1 title document, and
• the land is used primarily for private or domestic purposes

If the customer satisfies the private land test, the principal home and land (on the 1 title document) up to 2 hectares is exempt from the assets test. Note: a title document may have more than 1 parcel of land included.

A house and curtilage assessment is not applicable if the customer's principal home is on a single title which is less than 2 hectares. If this is the case, the principal home is exempt from assessment and does not need to be recorded on the customer's record except if it is related to a business, trust or company.

If the home property is greater than 2 hectares and the extended land use test criteria do not apply, an assessment of the house and curtilage is required. To determine the value of any excess land, the real estate form (Mod R) provides values for:

• the home and curtilage
• the home and surrounding title. See Assessing and coding real estate details

Any adjoining land on a separate title will be an assessable asset.

Three exceptions exist to the rule requiring land adjacent to the principal home to be held on one title document.

Under the 3 exceptions land held on more than one title document can be treated as if it were held on the same title document as the person's dwelling-house.

The exceptions are:

• where the dwelling-house is located on both blocks of land
• where all or part of the blocks of land are protected by a law because of the land's natural, historic or Indigenous heritage, or
• where the alienation (sale) of one of the blocks would seriously undermine the function of the house as a dwelling.

For more information, see Resources

Code this the same way as an extended curtilage assessment. See Assessing and coding real estate details

For more information on assessing additional real estate assets, see Assessment and sale of real estate and timeshare asset.

Is a house and curtilage assessment applicable to the customer's principal home and surrounding land?

• Yes, go to Step 6
• No, confirm any other real estate details are correctly coded. Procedure ends here

Has the customer continuously been on an income support payment from a period prior to 1 January 2007?

• Yes, go to Step 7
• No, savings provisions do not apply. Go to Step 8

Grandfathered savings provisions apply to 2 groups of customers for principal home and curtilage assessments made prior to 1 January 2007 where the home title is less than 2 hectares in size. These are:

• When a customer's home property is made up of more than 1 title but they have been assessed as if it was 1 title and given a 2 hectare exemption
• When the customer has been assessed under the single title rule prior to 1 January 2007 and thus have less than 2 hectares allowed as curtilage. Customers in this group can contact Services Australia at any time into the future and ask to have the 'old' 2 hectare exemption applied to them even though the land is on more than 1 title. The grandfathering provision can apply if they would have received an increase in payment if the 1 title rule had not been applied. This is because the previous policy of applying the single title rule was not supported by legislation and was removed before the implementation of the new rules from 1 January 2007

An example of the savings provision for real estate can be found in the Resources page.

Determine if the customer is better off being assessed:

• using the grandfathered savings provision, if entitled, or
• assessment under single title rule, and/or
• using the extended land use test, if entitled, or
• private land use test

Note: only customers who meet this savings provision should have 'Grandfathered' recorded as the Curtilage Type on the RE screen.

Is this the first assessment of the customer's house and curtilage?

• If this is the first assessment, go to Step 9
• If real estate is already on the customer's record and documentation has previously been supplied. See Step 1 in the Updating real estate value table

Establishing a net market value of a new or unrecorded property.

Where the customer advises of a new real estate asset a net market value of the customer's real estate must be established by issuing the customer with the following forms:

• Real Estate form (MOD R). Only one MOD R needs to be issued where there are multiple titles that are adjoining
• Business Details form (MOD F). Note: where the customer's real estate is used for business purposes a MOD F and a MOD R must be issued
• The Rural Property Questionnaire (Q454) letter 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 correctly value the property from the roadside. Generally, if the property is operated as a commercial enterprise, then issue the Q454 letter 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 and the customer meets extended land use test the Rural Property Questionnaire may also be useful to determine if the customer meets the effective land use test. If required, issue the Rural Property Questionnaire (Q454) letter
• Request any relevant documents. A title document must be supplied for any home property where house and curtilage applies and the property is made up of multiple titles. Other documents may include latest council rates/valuation, certificate of title, evidence of any mortgage on property or any other title document
• If the customer's real estate is linked to a business, trust or company, if not already supplied, request a copy of the latest financial statements, including a profit and loss statement, balance sheet or depreciation schedule to show any income or loss generated from the business

Note: if the customer is in receipt of a Blind Pension, Means Test free, then do not issue a MOD R and/or MOD F, as income and asset details are not required. However, care needs to be taken if they have a partner and the partner is not on a Means Test free payment. In this case, details are still needed for a review of the partner's entitlement.

• If forms and/or documents have not already been provided, issue a request. See Requesting information (CLK)
• Record details on a DOC
• When forms are completed and documents supplied, go to Step 10

• Ensure the MOD R has been fully completed including the 'Authority to inspect the property'. The customer must uniquely identify the location of any real estate or business site they own or have an interest in. For more information, see Assessing and coding real estate details
• Check that the customer has supplied the relevant documents showing any mortgage on the property, latest council rates/valuation, certificate of title or the title document. For more information on:
• mortgages or loans, see Loans and liabilities against assets
• title documents, see Assessing and coding real estate details
• If the customer's real estate is generating business income, ensure the financial statements, including a profit and loss statement, balance sheet or depreciation schedule has been supplied to show any income or loss generated from the business

Has the customer completed the Module(s) and supplied all of the required information?

• Yes, go to Step 11
• No, issue a letter requesting further information from the customer, see Requesting information (CLK). Until further information is supplied the procedure ends here

Is the real estate used for business purposes or linked to a trust or company?

• Yes, go to Step 12
• No, go to Step 13

If real estate is linked to a trust or company, see Real estate owned by a private trust or private company.

Procedure ends here for trust and companies.

New real estate should only be linked to a business where it is unavoidable, for example, a non-primary production business where there is a liability over all business assets (real estate and other) and the value of the net business excluding the real estate are negative. Real estate is not to be linked to a business unless advised and assessed by a Complex Assessment Officer (CAO). See Identifying and making suitable referrals to the CAO.

Any room located in a customer's principal home, or any part of the property that is used purely for commercial purposes, that is not also used for domestic purposes, is an assessable asset. This could include practitioner rooms for clients or patients located in the home, or leasing a portion of land to a telecommunications company for a tower to be located on.

This should be assessed as an asset of the business, and included and coded as part of the customer's business assessment.

A valuation is not required and the asset should not be recorded as real estate.

Exemptions from the assets test for house and curtilage may apply if the business real estate is also the customer's principal home and the customer satisfies the extended land use test.

If income is received from Water Licences/Rights or Allocations it will also be assessable. The amount to be assessed is the Gross income less any allowable expenses incurred in generating the income.

To update in:

• Process Direct, key Start in to the Super Key and select the Self-Employment workflow from the Task Selector.
  The workflow will:
• record business income and assets
• generate a detailed Note
• set up self-employment reviews
• will not update personal financial assets
• Customer Record:
• go to the Real Estate Business Summary (REBS) screen

If business real estate assets exist, the following updates are required:

• Code the Real Estate/Business Identifying (REBI) screen. The customer must uniquely identify the location of any real estate or business site they own or have an interest in. For more information, see Assessing and coding real estate details. When coding completed, press [Enter]
• Code the Business Detail (BUS) screen

The risk based model for real estate assessments will automatically assess the customer's individual circumstances and determines the appropriate method of assessment. Depending on the circumstances, the assessment may result in:

• acceptance of the customer's estimated value
• a check of the customer's estimated value, or
• a formal valuation

A customer is not expected to obtain professional valuations for any asset. However, if a customer provides a written valuation this can be used to determine market value if the valuation was done by a professionally qualified valuer and conforms to professional standards.

Only one real estate record is required for property containing multiple adjoining titles. Where multiple titles are separated by other real estate, a separate MOD R is needed and a separate record is required for each title.

Where a customer's land and principal home (the whole property) is on the one title document and exempt under the extended land use test, a valuation is not required and the customer's estimate of the value of the property is acceptable. See Assessing house and curtilage.

If a valuation is required (customer claiming Pension Bonus or the risk profile has resulted in a valuation and the home property is more than one title) a value will be obtained for the entire property and also for the principal home and surrounding land on one title. It is essential that the Real Estate Valuation Information (REVI) screen records the title of the home property.

The assets test exemption of curtilage real estate is applied to the land only and any commercial, farm buildings and/or plant and equipment will continue to be assessable assets. A valuation is not required for these assets. The customer's estimate or balance sheet value of these assets is acceptable.

For manual coding assistance, see Assessing and coding real estate details.

Note: the following properties are unsuitable for inclusion into the risk based model:

• Exempt real estate assets
• Properties where the house and curtilage value is equal to the market value
• Real Estate type SCF - Self-Contained Flats
• Real Estate type OTH - Other real estate assets for example Car Parks, Marina Berths
• Real Estate owned by a private trust or company
• Real Estate linked to a business
• Real Estate that has been gifted
• If a valuation or review of valuation is required, complete the Valuation Request (SA470) form and submit to the Valuation Helpdesk. The procedure Valuation of real estate and other assets contains a link to the form

Note: the date of effect of a new valuation is the date on which Services Australia determines the new entitlement. When the valuer advises of a new value for a property that a customer has already told us about, there are to be no overpayments raised against customers who have previously advised us of property ownership unless a person has deliberately misrepresented the details of the asset.

If the customer is claiming Pension Bonus Payment the claim is not to be granted until the completed valuation is returned. For more information, see Valuation of real estate and other assets at new claim.

See Step 1 in the Updating real estate value table.

Customer now meets the extended land use test?

• Yes, go to Step 7
• No, go to Step 2

Has the customer moved into a residence they already owned which is currently being assessed as an asset?

• Yes, go to Step 3
• No, go to Step 4

To determine homeownership or non-homeownership, see Determining homeowners and non-homeowners.

Non-homeowner

• If the customer was previously a non-homeowner with real estate as an asset, after they move into the property as their principal home, it should no longer be assessed as an asset except if the real estate is subject to a house and curtilage assessment. Go to Step 4

Homeowner

• If the customer was previously a homeowner and has moved into the property on the Real Estate Business Summary (REBS) screen, the property on the REBS screen becomes the principal home and the previous home becomes an asset
• If not already provided, issue a request for MOD R for details of the previous home. See Requesting information (CLK). This property is now an assessable asset
• Customers who entered aged care prior to 1 January 2017 who leave their residential aged care accommodation for more than 28 days or permanently, will have their rental income from the former home counted as income, and the former home will be assessed as an asset

Upon receipt of MOD R update property details on the customer's record. For assessment and coding assistance for the previous home, see Assessing and coding real estate details.

Update real estate currently on record with the new house and curtilage details. Go to Step 4.

If the customer's real estate was previously a fully assessable asset and the customer has now moved into this real estate as their principal home, which is subject to a house and curtilage assessment, there will be a need to cease the previous real estate assessment and re-code for the new house and curtilage assessment.

Real estate information will also need to be re-coded if the customer's relationship status has changed since the Real Estate (RE) screen was last updated.

Is removal of real estate required?

• Yes, go to Step 5 to remove current record
• No, go to Step 7

On the REBI screen update the:

• Sold/Gifted/Ceased: field with 'NAA' (no assessable asset value)
• Source: and Date of Receipt: fields; key as appropriate, then 'C' for correct

Press [Enter] to apply the updates, pressing [Enter] again will navigate to the RE screen.

On the RE screen:

• Key the % Asset Owned: field as '0'
• Update the value of the property to nil
• If the customer was receiving income from the property, key the income as zero on the following fields:
• Gross Annual Income $: '0'

Does a house and curtilage assessment (including extended) need to be added to the customer's record?

• Yes, go to Step 7
• No, go to Step 8

Where the customer advises of a change in the value of a real estate asset that is already recorded, see Maintaining the value of real estate assets on customer records.

Procedure ends here.

Note: where the property is made up of multiple titles only one real estate record is created if the titles are adjoining or contiguous. A separate real estate record is required only where the additional title/s is physically separated from the home property for example there is a road or other properties intervening.

Where a customer's land and principal home on the 1 title document is exempt under the extended land use test, a valuation is not required and the customer's estimate of the value of the property is acceptable. In this case both the market value and house & curt fields should be coded with the same customer provided figure, and will result in nil net assessable assets.

Any assessable business assets should be recorded as Other Assets on the REBI screen. The system is unable to apportion other assets based on the asset ownership percentage coded. These assets will need to be coded as the total amount owned by the customer and partner.

The assets test exemption of curtilage real estate is applied to the land only, and any commercial farm buildings and/or plant and equipment will continue to be assessable assets. A valuation is not required for these assets. The customer's estimate or balance sheet value of these assets is acceptable.

For all updates

• Update the principal home field on the REBI screen to 'Y' (yes)
• Enter the curtilage type in the Curtilage Type field
• PLU - Private Land Use test (for customers assessed under the single title rule)
• EXT - Extended Land Use test (where the extended curtilage concession applies. That is, the customer satisfies the extended land use test)
• Current market value $: the amount should represent the current value of the whole item of real estate and include the value of any assessable water rights related to the property
  Note: the assessment of water assets for Farm Household Allowance (FHA) customers is different than the assessment under social security policy, see Assessing assets for Farm Household Allowance (FHA)
• Current house and Curt. $: enter the value of the principal home and applicable surrounding curtilage. Curtilage amount is limited to land on the same title document as the home, to a maximum of 2 hectares, (but there is no size limit if eligible for extended curtilage concession)

The value of any land attached to the home, which is not regarded as curtilage, is an assessable asset. Only one item of real estate with a home and curtilage amount can be coded for each customer.

For more coding information, see Assessing and coding real estate details

• If applicable, change the address on the Address Details (AD) screen. For more information, see Changing address
• If customer is sharing with another person, who is not a close family member or partner, ask the Living Arrangements question set
• If the customer was not entitled to the extended land use test but may qualify within the next 12 months, a review is required. In Customer First, create a manual review on the Review Registration (RVR) screen and complete the fields as follows:
• Service Reason: customer's payment type
• Review Reason: MST (Manual Assets Review)
• Due Date: date customer will meet the 20 year rule
• Source: INT
• Date of Receipt: today's date
• Notes: 'Customer will meet the 20 year rule on xx/xx/xx. Check if customer meets all other criteria for grant of extended curtilage concession. Refer to OB 108-04070030.'
• Keywords: CURTLAGE
• Workgroup: leave blank
• Position: leave bank
• Transfer to Region: leave blank
• The review will mature on the Due Date coded in the RVR activity. Workload Management will allocate the review for manual action

Finalise the activity and record the details of the customer's real estate on a DOC.