'John' decides to:
- apply for the age pension and
- give up the city life for a more relaxed country lifestyle
However, he is unsure about selling his city home.
He decides to keep his house in the city and use his super to buy a house in the 'bush'. As the county house become his new home this property is exempt from the age pension assets test. His city property is then become his only asset.
We assist John in obtaining the age pension with the strategy:
- He is unemployed at the time of the application.
- His only asset is the city property and as the net property value - assessed property value less mortgage - is less than the asset test limit he obtained a full pension. As the property is no longer his home the mortgage value can then be used to reduce the asset value.
John receives the an age pension of $827pf or $21,505 per annum.
After a period John:
- Obtains casual work - as his employment is less than $6,500 pa he still receives the full pension.
- Rents out the city property. He is able to claim some expenses - agent and management costs, cleaning, travel to and from the property etc. The net income from the city property is then used to reduce his pension at a rate of 50c in the dollar. He receives $300 net per week rent for the property, therefore his pension is reduced by $150 per week.
So John's age pension has now been reduced from the initial $21,505 to $16,033 per annum. However, he now has additional annual income of $6500 from his casual work and $15,000 from the rent for his city property - totally approx. $37,500 for all income sources.
