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Principal Home

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Last updated: 1 November 2012

Definition of a principal home - current residence

    

The principal home of a person is generally the place in which they reside. The following property is regarded as part of the principal home:     

  • the residence itself (e.g. house, flat, caravan),
  • permanent fixtures (e.g. stoves, built-in heaters, dish-washers, light fittings and affixed carpets),
  • curtilage, and
  • any garage, shed, tennis court or swimming pool, if it is located on the same title as the residence and used primarily for private purposes.
Definition of a principal home - former residence

    

In certain circumstances, the principal home of a person can be the place in which they formerly resided. For example, when a person has entered care, or where the person is temporarily absent from the home, their former home might still be regarded as their principal home. This means that the home remains exempt from the assets test assessment as it continues to be regarded as an exempt asset.     

Assessment of refunded entry contribution on leaving a retirement village

Where a person receives a refund of their entry contribution amount on leaving a retirement village to enter aged care, the amount becomes an assessable asset as it no longer represents a principal home interest, i.e. an amount paid for the right to live in the retirement village.

However, entry contribution refunds may be delayed when a person leaves a retirement village. This may typically occur until the vacated unit is sold or for the time period specified in the Residential Agreement (commonly twelve months), whichever is the shorter period.

Where the refund of the person's entry contribution is delayed, and is not received for a period of time following their departure from the retirement village to enter aged care, the entry contribution amount continues to be exempt until such time as it is received.  Subject to the normal 2 year exemption limit, while the entry contribution amount remains with the retirement village owner it continues to represent the person's right to live in the retirement village, and retains the status of a right or interest in a principal home providing reasonable security of tenure.

For the extended exemption of the entry contribution amount to apply in these circumstances, it is necessary that the amount was a disregarded asset during the person's residency in the retirement village i.e. the amount exceeded the Extra Allowable Amount resulting in homeowner status.

Note: For means-testing relating to residential aged care fees and charges, policy advice from the Department of Social Services is that a refundable amount is assessable regardless of delays, or the likelihood of repayment.  Please refer to the Procedural Library for details.     

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Procedure Library - Refundable entry contribution is an asset for ACA

9.2.8/What is included in ACA assessment

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Person owns more than one residence

Where a person owns more than one residence, only one home may be considered to be the principal home. This applies even if both residences are on the same title. The home in which the person normally resides is regarded as the person's principal home. The other residence must be assessed as an asset. This includes the determination and holding of an asset value, where the second residence is under construction.     

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Valuing a property asset during construction

10.2.2/Valuation of Assets

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The only exception to this general rule is where two dwellings have been built on the same property title under dual occupancy arrangements.    

In the situation where a pensioner's principal home is contained within a block of flats or units, the value of any adjoining flat(s) also owned by the pensioner is assessed as an asset regardless of whether it is let.    

The following table demonstrates which residence should be considered to be the principal home. The other home is an assessable asset.

If a pensioner or couple owns more than one home and...

Then...

spend unequal amounts of time in each property,

whichever property in which the greatest aggregate amount of time is spent each yearis considered to be the principal home.

spend identical periods of time in each,

for administration purposes, the most expensive home is considered to be the principal home.

live in both houses separately (where the couple's separation is not due to estrangement),

for administration purposes, the most expensive home is considered to be the principal home.

live in both houses separately due to illness (but neither live “in care”)

for administration purposes, the most expensive home is considered to be the principal home

Note: If the pensioner owns a lost or damaged principal home and is constructing or acquiring a new principal home, exemptions may apply to both properties in certain circumstances.    

Holiday accommodation

Where an owned residence is occupied for part of a year by the pensioner and they spend the remainder of the year in rental holiday accommodation, this is considered to be only a temporary absence, and the owned residence remains the principal home. The temporary absence provisions only cease to apply after the pensioner has been in the rental accommodation for more than twelve months. Likewise, if a pensioner rents for the whole year but also pays holiday accommodation rent for part of the year, the principal residence remains the home that is rented for the whole of the year and rent assistance may be payable in respect of the principal home, but not for the holiday accommodation.    

The principal home has the meaning given by subsection 5LA(1) of the VEA and subsection 5LA(2) of the VEA. The principal home of a person is generally the place in which they reside. In certain circumstances, however, the principal home of a person can be the place in which they formerly resided. The following property is regarded as part of the principal home.

  • the residence itself (e.g. house, flat, caravan),
  • permanent fixtures (e.g. stoves, built-in heaters, dish-washers, light fittings and affixed carpets),
  • [glossary:curtilage:DEF/Curtilage] (i.e. two hectares or less of private land around the home where the private land use test has been satisfied, or all land held on the same title as the person's principal home where the extended land use test has been satisfied), or
  •       any garage, shed, tennis court or swimming pool used primarily for private purposes provided it is on the same title as the principal home.

 

 

Curtilage is the land adjacent to the exempt principal home.  A certain amount of curtilage is disregarded for the assets test.. The amount of curtilage that is exempt depends on whether the private land use test described in section 5LA(3) of the VEA, or the extended land use test described in section 5LA(4) of the VEA, is satisfied. Under the private land use test, up to two hectares on the same title as the principal home may be exempt. Under the extended land use test, all land on the same title as the principal home may be exempt.