The most consequential money decision in aged care
For most Australian families, the family home is the largest asset by far, and whether to sell it to fund a parent's aged care is the decision that keeps people up at night — emotionally and financially. The instinct is often to sell quickly to raise the accommodation deposit. Sometimes that is right; often it is not. The home is treated differently from every other asset, and selling can change the pension, the aged care fees and the family's options in ways that are easy to get wrong under pressure. This guide lays out how the house actually works in the system.
How the former home is treated
Once someone moves permanently into residential aged care, the home is exempt from the aged care means assessment while a "protected person" lives in it — a spouse or partner, or a dependent child, and in some cases a close relative or carer who has lived there and receives an income support payment. If a protected person lives there, the home is largely shielded and there is usually no pressure to sell.
If no protected person lives there, the home is counted in the aged care means assessment — but only up to a capped amount, not its full market value. A $2 million house and an $800,000 house are counted at the same capped figure (indexed; check the current cap on My Aged Care). This cap is the single most important fact families miss: beyond it, the extra value of an expensive home does not increase aged care fees.
The pension interaction — the part that catches people out
The former home is also treated specially for the Age Pension. For a period after moving into care (a defined number of years), the home can remain an exempt asset for pension purposes if it is being rented or in certain circumstances — but the rules changed in recent years and are nuanced. Selling the home converts an asset with special treatment into straightforward cash or a refundable accommodation deposit, which are assessed differently. The sequence and timing of a sale can move the pension by hundreds of dollars a month. This is precisely where advice from an adviser accredited in aged care pays for itself — the interactions between the home, the pension and the RAD are too intricate to eyeball.
Sell, rent, or keep?
- Sell when the home is empty, there is no protected person, the family wants to fund a refundable accommodation deposit (RAD) outright, and nobody wants the burden of managing a property. The RAD is government-guaranteed and refundable, and paying it from the sale can lift the pension because a RAD is exempt from the pension assets test.
- Rent when the family wants to keep the property (future use, sentiment, a rising market) and can use rental income toward the daily accommodation payment (DAP) and fees. Renting keeps options open but adds landlord responsibilities, and rental income is assessable — model the net effect before assuming it helps.
- Keep (unsold, unrented) when a sale would be forced at a bad time, when a protected person may return, or while the family decides. Paying the DAP rather than a RAD lets someone enter care without touching the house at all — useful breathing room while a considered decision is made.
The RAD decision and the house are one decision
The accommodation payment choice — RAD (lump sum), DAP (daily), or a combination — is inseparable from the house question. A common, sensible pattern: enter care paying DAP, so no rushed sale is needed; then, if and when the house sells, convert some or all of the DAP into a RAD to stop the daily interest and lift the pension. Homes must accept a top-up from DAP to RAD at any time. This staged approach removes the false urgency that leads to distressed sales.
Mistakes to avoid
- Selling before checking the protected-person rules. An avoidable sale can convert a sheltered asset into a counted one and cost pension entitlements.
- Assuming the whole house value counts. It is capped in the aged care means assessment — an expensive home is not the fee disaster families fear.
- Rushing to raise a RAD. You have 28 days after entry to choose the accommodation payment, and you can enter on DAP while the house situation resolves.
- Skipping advice. The home/pension/RAD interaction is the highest-stakes, most error-prone calculation in the whole process.
Where Curalune fits in
Decisions about the house become concrete only once you have a real home and a real room price to plan around. Curalune Care Help prepares a shortlist of 3–5 aged care homes around your area matched to your situation, with published room prices, contacts and a ready-to-send enquiry. Means-assessment treatment of the home, pension effects and RAD/DAP structures should always be confirmed with Services Australia, My Aged Care and an accredited financial adviser.
Paying less is mostly a paperwork problem
The advertised room price is only part of the picture. What a family actually pays is set by the income and assets assessment at Services Australia — it decides the means-tested care fee and how much of the accommodation cost the government covers. Lodge it before a room is offered, not after: doing it late costs weeks at the worst possible moment. Two things families miss: if paying the fees would cause genuine hardship you can apply for financial hardship assistance, and the choice between a lump sum (RAD) and a daily payment (DAP) can be changed within the first 28 days after entry.