Temporary Absence

Last amended: 7 October 2020

Temporary absence from principal home

Unless a person states a definite intention not to return to their principal home, an absence should generally be regarded as temporary. Absence from a principal home placed on the market for sale may be considered to be a temporary absence until the date that a sale contract is signed, as a return to the principal home before this date cannot be ruled out (e.g. if a sale does not proceed).  A person may also be considered temporarily absent from their principal home if it has been lost or damaged and they intend to repair or rebuild the home or acquire a new home.

A temporary absence should not be granted when a person has not been living in the principal home. A person needs to be living in the principal home prior to vacating the property for a temporary absence to be allowed.

Assessment of temporary absence up to twelve months

Where a person is temporarily absent from their principal home, that residence continues to be regarded as the permanent home for up to twelve months. During this time, the pensioner remains an ineligible property owner (homeowner) and is not eligible for rent assistance. Any income from the house is assessed under the income test and any relevant deductions applied.

If the temporary absence is due to loss of, or damage to the principal home, special assessment arrangements apply and are described below.

Assessment of temporary absence exceeding twelve months

If a person is temporarily absent from their permanent home for more than twelve months, the value of the property may only be disregarded in calculating the value of that person's assets during the first twelve months of such an absence. After the first twelve months, the place where they are actually living will be assessed as their principal home, which may alter their homeowner status.     

However, if the temporary absence is due to loss of, or damage to the principal home, an extension of the asset exemption and homeowner status beyond twelve months may be possible.    

Examples of temporary absences

A couple travels around Australia in their caravan, letting their house out to tenants. Their house remains an exempt asset for up to twelve months and the caravan is an assessable asset. As an ineligible property owner, they are not eligible for rent assistance for their site fees. The rental income they receive from the tenants in their house is assessable income.

If the couple continue to live in their caravan for more than twelve months, the house then becomes an assessable asset. The caravan is now taken to be their principal home and any site fees can be considered for rent assistance purposes.

Temporarily resumes occupancy

If a person temporarily resumes occupancy and subsequently vacates the principal home, a new twelve month exemption period would begin. Care should be taken to ensure that the person intended to resume living in the home and was not simply establishing a brief period of residency in order to extend their exemption period.

Multiple absences from principal home

There is no limit to the number of temporary absences from the principal home during which a person can be regarded as continuing to be a [glossary:property:] [glossary:owner:]. However, where a person has had a number of extended absences over the years, with minimal time actually in the residence, it may be appropriate to examine the facts to determine whether the person has established a permanent home elsewhere.

Assessment of temporary absence due to a lost or damaged home

If a person is temporarily absent because their principal home has been lost or damaged (including by a disaster), special arrangements apply if they intend to either repair/rebuild their old home, or buy/build a new home:

• The compensation or insurance proceeds received for the loss of, or damage to the principal home are a disregarded asset.    
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  10.2.3/Disregarded Assets Relating to the Principal Home

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• The proceeds may continue to be treated as a disregarded asset when used progressively to repair/rebuild the old home or acquire a new home.
• The proceeds treated as a disregarded asset are also exempted from the income test, including the deeming provisions.    
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  9.5.4/Deemed Income from Savings Investments

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• The person continues to be treated as a homeowner and the lower asset — [glossary:s:] [glossary:value limit:] applies.    
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  9.2.2/Homeowner's Basic Assessment Rules

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• They may be eligible for rent assistance as a temporary renter, if the home is uninhabitable and their accommodation costs are not otherwise covered by insurance or compensation.  Where the person's principal home is uninhabitable the person does not have reasonable security of tenure based on occupancy, and so they are not regarded as a property owner for rent assistance purposes.    
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  5.1.2/Property Owners and Rent Assistance Eligibility

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• These assessment arrangements cease at the earliest of:

• when the principal home is completed or acquired
• when they no longer intend to acquire a principal home with the proceeds
• twelve months from the loss or damage to the home (unless an extension of an additional twelve months applies, due to delays beyond the control of the pensioner).    
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  9.2.7/Extension of Home Proceeds Exemption

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Disregarded asset

For the compensation or insurance proceeds from the lost or damaged home to be treated as a disregarded asset, the person must intend to apply the proceeds to:    

• repair or rebuild the lost or damaged home, or
• acquire a new principal home.

Compensation or insurance proceeds for a lost or damaged home that are being treated as a disregarded asset, can remain disregarded when used for the uncompleted home. For example, when part of the proceeds are used to buy land where the new home will be built or for repairs to the damaged home.

If the person intends to build their new principal home on other vacant land they already own, then that land and any partially completed buildings may be considered part of their disregarded assets. The land of the former principal home and any remaining structures, if still owned, would instead become assessable assets under the assets test.

Proof of intention

If it is not certain that a pensioner intends to use the home compensation or insurance proceeds to acquire a principal home within twelve months, evidence should be sought. Documents that indicate an intention to acquire a residence include: a building contract for repairs/rebuilding or construction, a contract for purchase of real estate, a letter from a solicitor providing conveyancing services, a written statement from a real estate agent, or a statutory declaration by the pensioner.

Other factors to be considered will be the term of any temporary accommodation agreement entered into by the pensioner (whether it is of no more than 12 months' duration), and accessibility of the home proceeds if invested (a long-term fixed deposit might indicate that there is no real intention of using the funds to acquire a home within twelve months).

Example of home lost or damaged exemption

A pensioner's principal home was extensively damaged in a disaster and they receive $200,000 from their home insurer. The pensioner intends to use the whole of the insurance proceeds to rebuild their principal home. The $200,000 is a disregarded asset for up to twelve months and is also exempt from deemed income (while the asset is disregarded).

The pensioner is renting temporary accommodation while awaiting the rebuilding works. Because their damaged home is uninhabitable and their insurer is not paying or reimbursing the rent payments, they may be eligible for rent assistance despite being considered a property owner.

If towards the end of the initial twelve months exemption, the home is not yet completed due to delays beyond the control of the pensioner, an extension of up to an additional twelve months may be possible.