Seniors could score 'free money' to downsize home
PENSIONERS would receive a financial incentive to downsize their family home under a Budget plan that will release housing stock across the country and ease the pressure on cash-strapped seniors.
Treasurer Scott Morrison is believed to be considering measures to motivate older Australians to reap the equity in their homes and improve their quality of life.
The Courier-Mail has been told that some in the Government believe there is merit in a Budget submission from National Seniors Australia that calls for aged pensioners to downsize or quarantine a portion of cash from the sale of their home to invest in Government bonds.
Many older Australians don't want to sell their family home because they don't want to pay stamp duty on a new property and because the cash left over from buying a smaller home could affect their aged pension.
The family home is not counted in the assets test for the aged pension. However, if they do sell, after 12 months they can face financial penalties, including losing all or some of their welfare payments and concessions.
There are about 2.5 million aged pensioners in Australia, and more than 1.9 million live in their own homes.
The Government is evaluating various measures in the Budget to address housing affordability and win back older voters.
Mr Morrison would not reveal his views on the plan.
Analysis by The Australian late last year revealed the Coalition's primary vote among voters over 50 had plunged since the July election.
National Seniors Australia advocate Ian Henschke said a plan to help seniors sell their homes would benefit older Australians, the Government, and those looking to break into the housing market.
On top of current exemptions, up to $250,000 would be quarantined from the asset test after selling the family home.
"Under our Rightsizing Program, Australian seniors will have the choice of where they live and of not being trapped in an asset rich, income poor situation, which is what many of them find themselves in now," Mr Henschke said.
"We have older Australians who are living in homes they can't afford to maintain, that don't suit their needs, and that lock up their assets.
"The Rightsizing Program gives people more choice."
UPSIDE TO TOUGH CHOICE OF DOWNSIZING
THE decision to sell the family home was emotionally difficult but financially prudent for retired accountant Kevin Dodd and wife Pamela.
"There's a lot of emotional attachment to the family home - that's where we brought up the kids, and it's a bit of a decision to make," Mr Dodd, 69, said. "But from the financial aspect, it makes sense."
The Dodds' 40-year-old, two-storey home in Brisbane's south was becoming difficult to maintain. But the couple ended up losing their part-pension in January due to the sale.
Mr Dodd said the financial incentive being considered by Treasurer Scott Morrison would have helped in their decision to downsize.
"We looked at the financial aspect of it quite carefully, and it would likely be the last time we moved in our lifetime," he said.
Instead of downsizing to a smaller home as planned, Mr Dodd and 74-year-old Pamela moved into Elements Retirement Living in Springwood to live with people their age and to be closer to their children, who live nearby.
The retiree said his children were supportive of the move and it costs them less to live in the retirement village than at home.