Vacation of principal home due to illness 102-03010050

Customers, who are homeowners and leave their principal home due to illness to enter a care situation, may have their home exempted from the income support payment income and assets test. In general, when a customer leaves their principal home and enters a care situation the home is exempt from the assets test for 2 years from the date the customer entered care. Once the 2 year period has expired, the customer will be assessed as a non-homeowner and the home will be assessed as an asset.

For non-homeowners leaving their principal home, see Temporary accommodation and Rent Assistance (RA).

Supported Residential Service: if the customer has entered a care situation in a Supported Residential Service (SRS), the former home is exempt from the assets test for 2 years from the date the customer entered care and Rent Assistance (RA) may be payable. If the customer has paid a lump sum as a condition of entry and the SRS is assessed as a special residence the customer’s homeownership status and payability of RA will be determined by assessment of the entry contribution.

Retirement Village: if the customer is a retirement village resident, and enters a unit or aged care section of the village, for which ongoing government funding is being provided, and they are an aged care resident, then the person is 'in residential care'. The former home is exempt from the assets test for 2 years from the date the customer entered care. The customer’s homeownership status and payability of RA will be determined by the assessment of the Entry Contribution (EC).

Care to another: if the customer is a carer who has vacated their principal home to provide a substantial level of care to a person in a private home for at least 14 consecutive days, the 2 year exemption also applies to them. If the care receiver passes away, the carer can also have a temporary absence applied for up to 12 months from the date the care receiver passes away, before the former principal home of the carer is assessed as an asset.

Customers who entered age care prior to 1 January 2017

For income support payments, the value of their former principal home and any rental income received is exempt while they pay their accommodation charge or lump sum accommodation payment periodically.

Customers who entered aged care from 1 January 2017

The net rental income from their former principal home is assessed as ordinary income, which may affect the customer’s rate of income support payments.

For the purpose of Aged Care Means Test assessments, if the customer is receiving rental income from their former principal home, see Aged Care means assessment - Rental income from principal home.

If the customer entering care is partnered and the partner remains in the former principal home, then the home continues to be an exempt asset whilst the partner lives there. The 2 year exemptions only commence when the remaining partner later vacates the home.

The principal home’s 2 year exemption from the assets test due to the customer entering a care situation runs concurrently with other exemptions (for example, a customer may have temporarily vacated their principal home with the intention of travelling for 12 months however, only six months into this exemption they become ill and cease travelling to move into care). The 2 year exemption starts from when the customer commences to receive care.

The 2 year exemption due to the customer entering a care situation can run concurrently with the exemption due to the customer either:

• accruing a liability to pay an accommodation charge, or
• paying a lump sum accommodation payment (for example accommodation bond or refundable Accommodation Deposit) by periodic instalments, or
• by a combination of a part lump sum and periodic instalments and (in both cases) they are receiving rental income from the former principal home

Therefore if the customer stops paying accommodation bond instalments or stops receiving rental income for their former principal home they will receive the benefit of the remainder of any 2 year exemption due to entering a care situation. Note: the lump sum accommodation payment/charge exemption as outlined above can, in some situations, start to apply from a date after the 2 year exemption of the customer’s former principal home has ended. The property being rented out must be the same former principal home that the customer vacated to enter a care situation. Examples of where this could occur include:

• A customer who has been in residential aged care for more than 2 years and who has been paying either an accommodation charge or accommodation bond by periodic payments from the date they were admitted to care, starts to rent out their former principal home that they vacated to enter residential aged care after the 2 year exemption of their former principal home has ended
• A customer’s 2 year exemption of their former principal home after vacating it to receive care in a private home (for example. in a family member’s home) has already ended before they leave that private home where they were receiving care to enter residential aged care and they then start to pay either an accommodation charge or accommodation bond by periodic payments and at the same time rent out their former principal home

In both of the examples outlined above the exemption can start to apply from the date that all the relevant qualifications are being met at the same time. For example, from the date that the customer is paying either an accommodation charge or accommodation bond by periodic payments and at the same time they are renting out their former principal home that they had vacated to enter a care situation.

For customers paying an accommodation charge who first entered residential aged care:

• before 1 July 2004, the maximum length of time that the former principal home can be exempted from the asset test is 5 years, because for these residents an accommodation charge cannot be levied for more than 5 years
• between 1 July 2004 and prior to 1 January 2017, the former principal home can be exempt from the income and asset test for an indefinite period of time, whilst the mandatory conditions (above) are being met, because there is no limit on how long an accommodation charge can be levied
• on or after 1 January 2017, the former principal home will be exempt from the assets test for 2 years after the customer vacates it to enter a care situation

Accommodation bond exemptions can be for an indefinite period.

Home Vacation review activities have been consolidated across sites nationally.

For more information about when a customer’s home may be exempt from the assets test see the FAQs on the Resources page. For example:

• what if the home is sold during the exemption period
• what happens after the 2 year exemption period