My home is worth a fraction of a city home but my pension is cut … why?


The widely held belief that the family home is not included in the assets test is not exactly true.

There are two instances where the family home is included in the assets test:

  • when it sits on land greater than 2 hectares
  • when you live in residential aged care.

This article will look at how the family home is treated when on larger blocks in rural areas.

How large rural blocks affect the assets test


While the family home is exempt from the Age Pension assets test, what about the land around the home?

Many members have asked us this question, including a 70-year-old from Western Australia who owns a 40-hectare family property.

According to Centrelink, the principal home is the home you live in, plus the first 2 hectares it sits on, on a single title.

Our member’s house and the first 2 hectares are not assessed but the other 38 hectares are. This has eaten into his pension payments.

He feels justifiably aggrieved to hear that many city homeowners - whose principal homes are worth far more, are not subject to the means test.

Are there exemptions?


There are instances where the land on a single title above the 2 hectare-threshold may be exempt.

This may occur if you or your partner:

  • have reached Age Pension age
  • are getting the Age Pension, Carer Payment or Pension Bonus Bereavement Payment
  • have lived there for the past 20 years in a row
  • are getting a service pension from the Department of Veterans’ Affairs
  • pass the land use test.

Extended land use test


Under the land use test, there are three ways you can get an exemption from the assets test:

  • you or a family member are running a farming business on the land
  • you are leasing the land to someone else for a commercial rate of return
  • you have little or no scope to earn income from the land.

For more information, visit the Department of Human Services website.

If issues like this are important to you, please join our Fairness in retirement income campaign.

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