Australia’s tax and social security systems often favour homeowners, creating what many see as an unequal advantage over renters. This imbalance plays out across both tax rules and Centrelink’s age pension assessments.

Homeowners vs Renters: The Advantage Explained

From a tax perspective, homeowners enjoy a major benefit — the principal place of residence is completely exempt from capital gains tax (CGT), regardless of how much it increases in value. Rentvesters, on the other hand, who rent where they live and invest elsewhere, must pay CGT when they sell their investment property.

When it comes to Centrelink’s age pension assets test, homeowners again come out ahead. The value of the family home is exempt from assessment, unless it’s situated on more than two hectares. Renters don’t receive an equivalent exemption, though they are given a slightly higher asset threshold.

Using Your Home to Increase Pension Eligibility

Because the family home is exempt, some retirees use this rule strategically — shifting wealth into their home to reduce assessable assets and increase pension entitlements.

Centrelink’s current age pension pays up to $30,646 per year for singles and $46,202 per year for couples. Under the assets test:

• Single homeowners can hold up to $321,500 in assets before their pension is affected.

• Couples can hold up to $481,500 in assets.

There’s no upper limit on the home’s value for this exemption — whether it’s worth $500,000 or $5 million, it remains excluded from the test.

Case Study: The Home Upgrade Strategy

Consider a single retiree who owns:

• A $1 million home

• $800,000 in super

• A $20,000 car and $30,000 in savings

Their total assessable assets are $850,000, exceeding the $714,500 limit for a part pension, meaning no age pension would be paid. They would instead rely on super drawdowns — at 7% returns, that’s about $56,000 per year.

Now, suppose this retiree sells their home and buys a more expensive one:

• Home sold for $1M (net $965,000 after costs)

• New home purchased for $1.45M

• Total purchase cost including stamp duty and legals: $1.52M

To bridge the $555,000 gap, they withdraw from super, reducing it to $245,000. Add the car and bank account, and total assessable assets drop to $295,000 — qualifying for the full age pension of $1,178 per fortnight.

Comparing Outcomes

Before the move:

• Super drawdown income: $56,000/year

• No pension entitlement

After the upgrade:

• Super income drops to $17,150/year (7% on $245,000)

• Plus full age pension of $30,646/year

Total annual income = $47,796, only about $8,200 less than before. When pension concession benefits (like cheaper healthcare and utilities) are factored in, the gap narrows further.

Alternatively, instead of upgrading, retirees could renovate their existing home — achieving a similar effect without paying stamp duty and agent fees.

The Gifting Strategy

Another way to manage assets is through gifting.
You can gift up to $10,000 per year and $30,000 over five years without penalty. Any amount above these caps is treated as a deprived asset for five years — meaning it still counts toward your assets test.

A smart move is to make gifts before age 62, so that by the time you reach 67 (the current age pension age), the five-year period has passed and the gifts are fully excluded. This approach can include gifting cars, boats, cash, or other valuables as an early inheritance.

Proceed with Caution

While these strategies are legal and effective, they come with significant risks.
Using your super or cash to upgrade a home or gift assets may leave you cash-poor and vulnerable to unexpected costs — like medical bills or major property repairs. Once those savings are gone, you could find yourself worse off, even with a pension.

For most retirees, the goal should be balance — using the rules wisely without compromising long-term security. Before taking any action, seek advice from a licensed financial adviser who understands both Centrelink rules and superannuation strategies.