Selling your home to pay for care
A move into residential aged care often leaves the former home vacant and families with the dilemma of what to do with the home.
Many people choose to use their former home to help pay their aged care fees, particularly the accommodation costs. This is where advice and cashflow modelling is important to help understand the implications, and to compare options such as selling, renting or drawing out equity.
Managing cashflow when the home won’t sell
Financial advice can also help you understand strategies that can manage cashflow and give you breathing room while you wait for a sale at a reasonable price; while talking to a real estate agent who is able to evaluate the market can help with timing and setting expectations.
Rushing a sale may be costly if it forces you to accept a low price, and understanding your options and strategies may help remove some of the stress with making the decision and the pressure to sell immediately.
What is a RAD (Refundable Accommodation Deposit)?
As your accredited Aged Care Adviser, some of the strategies that we may may review with you include:
Paying a portion of the accommodation payment as a lump sum (called a refundable accommodation deposit – RAD) and asking the provider to take other fees out of this amount, or
Accessing the Pension Loan Scheme from the Government to borrow some equity from your home as increased cashflow or bridging finance, until the property sells or you secure a tenant.
And if things get really difficult, you may have the option to apply for financial hardship to get some concessions on the fees you have been asked to pay. There are strict conditions for financial hardship, including no excess gifting in the last five years.
Everyone’s situation is unique, and the interaction between age pension, aged care fees, taxation and cashflow can be complicated, so it is important to have all the information to make an informed choice.
Contact us today if you are thinking of selling your home to pay for care, looking at options for yourself or a family member, or need some advice to navigate the aged care system.
Disclaimer: Prepared without taking into account your objectives, financial situation or needs. Before acting on any information in this article, Olive Grove Financial Advice recommends that you consider whether it is appropriate for your circumstances. Information in this article was correct and current as of 23 May 2022.
Olive Grove Financial Advice is operated by Bill Savellis through The Financial Advisor (Australia) Pty Ltd ABN 72 619 546 431, who is a Corporate Authorised Representative (No. 1278394) of Havana Financial Services Pty Ltd.