“What happens if a pensioner takes out a $100k loan out against the home?” As with salary sacrifice, negative gearing etc. Centrelink treats the loans completely different to the ATO. Under Centrelink rules, loans taken out and secured over a person’s home are not counted as a liability, no matter what purpose they have been taken out for. If the money was taken out and placed into the bank – any account, savings, term deposit etc. – Centrelink will: • Add the $100k to the pensioner’s assets for the purpose of the assets test • Add the deemed income to the income test, and • The interest paid on the loan will not be taken into the account to reduce the deemed income. Of course if – say - $60k was used for renovations, then only the remaining $40k will be used to adjust the Centrelink assets and income values. However, again no recognition will be made of the interest being paid on the $100k loan. That is, your ‘deemed income’ will not be reduced by these interest costs. ...
Your age pension concierge service for Centrelink. Case studies and observations on claiming and maintaining the Centrelink age pension in Australia. The objective of this blog is to inform and promote discussion. Information contained within is generic and does not constitute advice, and professional assistance is recommended before any action taken with Centrelink.