OzChef Posted September 1 Share Posted September 1 Hey, not quite a Pom in Oz, more the other way round but thought this might be the right place. I'm living in the uk, but have Australian citizenship. My mum lives over there as well as my sister and brother. My mum owns her house outright. Worth about 750k. She needs to downsize, somewhere a bit closer to my sister, so she can help out. My mum has very little savings and her super is very little too. The idea is she sells her place, buys something for about 500k and claims her pension from centrelink and obviously the extra 250k. Then if she ever needs to go into higher care, she can sell her new property, if needed. I'm really keen to try and keep the family home, if possible. I thought that.... 1) my mum could transfer her current property into my sisters name. 2) I could gift my sister enough for a deposit on a second property (about 500k in value). Which she could get a mortgage on, as she doesn't currently have a mortgage. 3) my mum would live there, rent free obviously, with the rental income from her original property (now in my sisters name) to pay for the mortgage, with any excess to go into my mums account. My question is, would my mum be able to claim her full pension from centrelink as technically, she would have no assets and no additional income? Or would centrelink count the value of her old property against her, even if it had been gifted, or sold for a nominal amount? Or is it a grey area? Any advice would be great Thanks Quote Link to comment Share on other sites More sharing options...
Tulip1 Posted September 1 Share Posted September 1 (edited) 3 hours ago, OzChef said: Hey, not quite a Pom in Oz, more the other way round but thought this might be the right place. I'm living in the uk, but have Australian citizenship. My mum lives over there as well as my sister and brother. My mum owns her house outright. Worth about 750k. She needs to downsize, somewhere a bit closer to my sister, so she can help out. My mum has very little savings and her super is very little too. The idea is she sells her place, buys something for about 500k and claims her pension from centrelink and obviously the extra 250k. Then if she ever needs to go into higher care, she can sell her new property, if needed. I'm really keen to try and keep the family home, if possible. I thought that.... 1) my mum could transfer her current property into my sisters name. 2) I could gift my sister enough for a deposit on a second property (about 500k in value). Which she could get a mortgage on, as she doesn't currently have a mortgage. 3) my mum would live there, rent free obviously, with the rental income from her original property (now in my sisters name) to pay for the mortgage, with any excess to go into my mums account. My question is, would my mum be able to claim her full pension from centrelink as technically, she would have no assets and no additional income? Or would centrelink count the value of her old property against her, even if it had been gifted, or sold for a nominal amount? Or is it a grey area? Any advice would be great Thanks I don’t think it’s a grey area. I think it’s a no. I think it would be seen as a deliberate deprivation of capital. From what you’ve said, your mum stands to gain nothing from that arrangement. If anything she has less because she doesn’t have the over $200k difference in selling and buying to enjoy as she wishes. She ‘might’ get a bit that’s left after the mortgage is paid but that’s not as good as a nice pot of money. What about if she needs to go into higher care as you mention. She no longer has her new property to sell. I guess that would fall on centrelink too? Many try and get rid of their assets to retain benefits but the powers that be aren’t stupid and they dig deep. I expect you need legal advice on this. A solicitor might be a good start. Edited September 1 by Tulip1 1 1 Quote Link to comment Share on other sites More sharing options...
paulhand Posted September 1 Share Posted September 1 38 minutes ago, Tulip1 said: A solicitor might be a good start. I think this an excellent idea … and an accountant too. 1 Quote Link to comment Share on other sites More sharing options...
OzChef Posted September 1 Author Share Posted September 1 I felt that if she were to go in to higher care, then we could sell the house that we bought for her. If there was enough capital in it. Otherwise, we could sell her original house. We are just thinking of whatever we can to try and keep the house. But have a feeling it probably won’t happen. Hopefully be heading back to Oz for a month at Easter so will try talking to a lawyer then. Quote Link to comment Share on other sites More sharing options...
Marisawright Posted September 1 Share Posted September 1 (edited) 5 hours ago, OzChef said: I felt that if she were to go in to higher care, then we could sell the house that we bought for her. If there was enough capital in it. Otherwise, we could sell her original house. We are just thinking of whatever we can to try and keep the house. But have a feeling it probably won’t happen. Hopefully be heading back to Oz for a month at Easter so will try talking to a lawyer then. My question would be, how much do you trust your sister? Once the house is in her name, you have no power to decide anything about the property. You keep saying "we" but it won't be "we", it'll be entirely up to her. What if you feel your mum needs to go into higher care, but your sister doesn't agree? You can't force her to sell. What happens if your sister dies? She could agree to make a will, now, that will leave half the property to you -- but you can't stop her changing that will later. And if she doesn't make a will and she dies suddenly, the property goes to her spouse or children -- they might not honour a handshake agreement. If I were in your mother's shoes, I would not do this. She's surrendering most of her money to her daughter (not to you) and she will lose all control over the decisions made about her life in the future. That's removing her dignity. Don't reduce her to childlike dependence just because you want the house. Edited September 1 by Marisawright 1 Quote Link to comment Share on other sites More sharing options...
Marisawright Posted September 1 Share Posted September 1 Another question -- does your mother really need to downsize? Has she been in touch with My Aged Care to get an assessment of her needs? They can help arrange a gardener, handyman, home care etc so she can stay in her house. Bear in mind that your proposal will incur taxes and surcharges and legal fees. Instead of spending the money on that, could you invest in making the family home safe for your mother to live in? e.g. ramps, handholds, moving her bedroom downstairs, making the bathroom safe etc. There are services that can do that for you. Quote Link to comment Share on other sites More sharing options...
Skani Posted September 2 Share Posted September 2 18 hours ago, OzChef said: My mum owns her house outright. Worth about 750k.... My mum has very little savings and her super is very little too. The idea is she sells her place, buys something for about 500k and claims her pension from centrelink and obviously the extra 250k. Then if she ever needs to go into higher care, she can sell her new property, if needed. Your scenario is fraught with dangers and I would endorse the recommendation that you seek professional advice. "Her super is very little too". Why doesn't she apply for the pension now? Her current principal residence is not included in the assets test but, if she downsizes and acquires an extra 250k in cash, Centrelink will deem that money to be earning extra income - at a percentage rate they choose - and will decrease her pension accordingly. Yes, Centrelink does take into consideration money which has been gifted. Re the suggestion about transferring into your sister's name: this situation can go horribly wrong no matter how well intentioned in the beginning. There are too many variables in human nature and unforeseen events. Quote Then if she ever needs to go into higher care, she can sell her new property, if needed. This may also not be the best strategy. If you go into care and own your own home the daily rate you are charged is less than if you sold your home and placed the proceeds in the bank. Another reason you should seek professional advice before making such decisions. In any event, from the details you have given I cannot see why your mother doesn't claim a pension now (assuming she has met the age requirement). Her residential house will not affect the pension she receives. Quote Link to comment Share on other sites More sharing options...
Blue Manna Posted September 2 Share Posted September 2 I have family who did something like this. Yes you can get away with it, although Centrelink would probably look very closely at it, and could rule against you. Toss of a coin. The brother and sister in question had a falling out about the capital gains tax on the second property and now no longer speak to each other. 1 Quote Link to comment Share on other sites More sharing options...
OzChef Posted September 4 Author Share Posted September 4 Thank you all for your advice. I feel like I may talk to a solicitor, with my sister, when I make it back. Hopefully my mum can stay in her home a little longer if we find a way to make it easier for her, then potentially I could save a deposit for her house over the next couple years and we could buy it off her. Quote Link to comment Share on other sites More sharing options...
Marisawright Posted September 4 Share Posted September 4 (edited) 32 minutes ago, OzChef said: Thank you all for your advice. I feel like I may talk to a solicitor, with my sister, when I make it back. Hopefully my mum can stay in her home a little longer if we find a way to make it easier for her, then potentially I could save a deposit for her house over the next couple years and we could buy it off her. May I suggest you get your mother to talk to a solicitor. It is her house and should be her decision. She may be frail, but unless she has dementia, she still has her marbles! The reality is you are planning to hand most of your mother's life savings to your sister. Your mother may be reluctant to object, for fear of upsetting you both. It's important that she has an impartial adviser who can ensure her views are respected and her future is safeguarded. Even if you trust your sister implicitly, there are all kinds of things that can go wrong. You owe it to your mother to ensure she is protected and does not lose the right to reclaim the money she worked so hard for, if need be. In the meantime, make sure your mother has taken advantage of all the support services that are available to her (see below). https://www.myagedcare.gov.au/ Edited September 4 by Marisawright 1 1 Quote Link to comment Share on other sites More sharing options...
Parley Posted September 4 Share Posted September 4 Making a Downsizer contribution of up to $300K into superannuation when you sell your home and buy a cheaper on can be a good option to boost your super. 1 Quote Link to comment Share on other sites More sharing options...
Ken Posted September 7 Share Posted September 7 On 01/09/2024 at 23:01, OzChef said: Hey, not quite a Pom in Oz, more the other way round but thought this might be the right place. I'm living in the uk, but have Australian citizenship. My mum lives over there as well as my sister and brother. My mum owns her house outright. Worth about 750k. She needs to downsize, somewhere a bit closer to my sister, so she can help out. My mum has very little savings and her super is very little too. The idea is she sells her place, buys something for about 500k and claims her pension from centrelink and obviously the extra 250k. Then if she ever needs to go into higher care, she can sell her new property, if needed. I'm really keen to try and keep the family home, if possible. I thought that.... 1) my mum could transfer her current property into my sisters name. 2) I could gift my sister enough for a deposit on a second property (about 500k in value). Which she could get a mortgage on, as she doesn't currently have a mortgage. 3) my mum would live there, rent free obviously, with the rental income from her original property (now in my sisters name) to pay for the mortgage, with any excess to go into my mums account. My question is, would my mum be able to claim her full pension from centrelink as technically, she would have no assets and no additional income? Or would centrelink count the value of her old property against her, even if it had been gifted, or sold for a nominal amount? Or is it a grey area? Any advice would be great Thanks I think there is a very good chance that Centrelink would consider the current property to still be owned by your mum and only nominally in your sister's name. Because she is no longer living there it would now be considered to be an investment property and not exempt from the assets test. Her assets might therefore put her over the threshold to prevent her getting the full (or any) aged pension. That said, provided the sale price is at an arms-length value, it is possible for you and/or your sister to purchase your mother's house. Unfortunately, I suspect that neither you nor your sister can afford that or obtain the mortgage needed. 2 Quote Link to comment Share on other sites More sharing options...
Ken Posted September 7 Share Posted September 7 On 04/09/2024 at 17:36, Parley said: Making a Downsizer contribution of up to $300K into superannuation when you sell your home and buy a cheaper on can be a good option to boost your super. That's not going to help in this case. The superannuation balance is included in the assets test for the age pension just like any other bank account. For a single homeowner assets (including Super but excluding the home) must be below $268,000 to receive the full pension. If assets are over $585,000 no pension is received. 1 Quote Link to comment Share on other sites More sharing options...
OzChef Posted September 9 Author Share Posted September 9 On 07/09/2024 at 10:10, Ken said: That said, provided the sale price is at an arms-length value, it is possible for you and/or your sister to purchase your mother's house. Unfortunately, I suspect that neither you nor your sister can afford that or obtain the mortgage needed. I feel like within 2-3 years I will have enough saved for a 75k deposit. Hopefully interest rates will be better. Although I’ll still need my sister or brother to take the mortgage out in their name or joint names. Then I provide the deposit. However the value may be higher by then and the 75k may not be enough Quote Link to comment Share on other sites More sharing options...
Marisawright Posted September 9 Share Posted September 9 2 hours ago, OzChef said: I feel like within 2-3 years I will have enough saved for a 75k deposit. Hopefully interest rates will be better. Although I’ll still need my sister or brother to take the mortgage out in their name or joint names. Then I provide the deposit. However the value may be higher by then and the 75k may not be enough It seems you're determined to go ahead with this scheme regardless of all the warnings being issued. 1 Quote Link to comment Share on other sites More sharing options...
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