Last amended: What is a special residence?
A residence is a special residence if it is:
- in a retirement village,
- in a residence determined to have similar functions to a retirement village,
- a granny flat, or
- the principal home subject to a sale leaseback agreement.
Entry contribution
An entry contribution is the amount paid in order to secure the person's right to live in the special residence. This amount is used in the special residence basic assessment rules to determine whether the person should be considered a homeowner or a non-homeowner.
Note: If the special residence is either a granny flat or is subject to a sale leaseback agreement, there are additional assessments to be undertaken before applying the basic assessment rules.
Retirement village
A retirement village is accommodation intended mainly for people aged 55 years or over. Usually a retirement village is made up of self-care units, serviced units, hostel units or a combination of these. Most retirement villages also have communal facilities such as a dining room, kitchen or entertainment area.
Granny flat arrangement
A granny flat arrangement is where a pensioner acquires either a right to accommodation for life or a life interest in the residence in exchange for a valuable contribution. They are often family arrangements to provide assistance for the pensioner.
9.2.5/Granny Flat Arrangements
Sale leaseback arrangement
A sale leaseback arrangement allows a person to sell their home but retain the right to live in that home for life or for a fixed period. These arrangements often involve the buyer paying the pensioner an initial payment and agreeing to pay a deferred payment amount to the pensioner at the end of the fixed period, or to the pensioner's estate upon the death of the pensioner.
Supported residential services
Supported residential services (SRS) operate privately in Victoria, New South Wales, South Australia, Queensland and Western Australia. An income support pensioner entering SRS accommodation and required to pay an entry contribution may be able to access the special residence assessment rules.
Shared equity housing
Some organisations provide accommodation through a company structure for particular groups, such as the elderly or people with a disability, on a shared equity basis. The amount paid for shares in the company operating the housing is regarded as being the person's entry contribution amount.
Company title property ownership
A company title property ownership is not assessed as a special residence.
Company title property ownership occurs where a block of flats, units or apartments is held under a single title. A person with company title property ownership purchases a share in the company that owns the property, rather than purchasing the title for the individual property in which they live. Company title property ownership differs from shared equity housing as the amount paid for the share in the company is not regarded as an entry contribution.
If the person's share in the company gives them a right to live in the property, they are regarded as a homeowner for pension purposes.
Assessment of the vacated former home
If the pensioner was a homeowner prior to entering a special residence and is retaining ownership of the former home, the asset value of the former home will be included in the assets test. This is because the special residence is now the person's principal home.
Person Owns More Than One Residence
If the pensioner resides in a SRS and is regarded as being in a care situation, the former home can be exempt for up to two years from the date that the pensioner enters the SRS.
Note: This does not apply to sale leaseback arrangements, where any remaining right or interest in the former principal home will be considered in the assessment of the deferred payment amount.