Ask Paul: Would selling an expensive piece of real estate affect my pension?


Paul, I am 80 years old and live in Melbourne with my wife, in an expensive piece of real estate. I am contemplating selling. 

If I do sell, what would be the best way to then organise my life? I am an age pensioner - could this affect my pension

Should I buy shares or invest in superannuation? What would be the best outcome? - Henry

ask paul clitheroe selling expensive real estate affect age pension

Yes, Henry, it would definitely impact your pension if you sold a valuable home and did not buy another one.

As you know, our age pension system does not count our home as an asset. If you sell, the money will not count as an asset for 12 months, providing you intend to buy another home. You will also have "deemed income" calculated on the proceeds.

This is all a bit tricky. If you sell, your "intention" to buy another home is very important. If you do not do so, the whole amount of the sale price will be treated as an asset.

But the most important thing is what do you want to do?

If you want to stay where you are, but would like more lifestyle money, please talk to the pension people. The Pension Loan Scheme can pay you up to 150% of your pension. This may be preferable to a reverse mortgage if you want to stay in your home, but with more income.

If you are moving for lifestyle reasons, maybe to a regional area, and the sale proceeds are a lot more than the cost of a new home, that is just fine. Yes, you may lose all your pension, but if you have a large pot invested, you are likely to have much income from investments.

It does upset me when people value their pension more than how they want to live.

I get really cranky when I hear from people deliberately wasting money just to get a few more pension dollars. That really is madness.

What I would like you to do, Henry, is to decide what is best for you. When you do that, go along and chat to the aged pension people to work out your options before you take any action.

From 40 years of experience, though, I do know that the best decisions are not made by tax or pension considerations.

Set your own personal goals, then move on to pensions, tax and investments.

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Paul Clitheroe AM is founder and editorial adviser of Money magazine. He is one of Australia's leading financial voices, responsible for bringing financial insight to Australians through personal finance books, the Money TV show, and this publication, which he established in 1999. Paul is the chair of the Australian Government Financial Literacy Board and is chairman of InvestSMART Financial Services. He is the chair of Financial Literacy at Macquarie University where he is also a Professor with the School of Business and Economics. Ask Paul your money question. Unfortunately Paul cannot respond to questions posted in the comments section. View our disclaimer.
Money magazine
June 8, 2022 9.43am


Paul Clitheroe is unable to respond to questions posted here in the comments. Please submit your question via this link:

Nina Martin
June 13, 2022 1.56pm

Hi Paul

can you please advise me on how to became more financial

On a old age pension and I own my town house but no money in the bank


Nina Martin

Money magazine
June 14, 2022 9.25am

Hi Nina,

Unfortunately, Paul Clitheroe cannot respond to questions or comments here. To submit your question for consideration, please email [email protected] or fill in the form here:

- Money team

Peter Ralph
June 8, 2022 5.39pm

Hi, Paul, this comment is not directed at Henry. Good luck to him but not means testing the family home is a travesty. By way of example, 70 yo Jack owns a small manufacturing business valued at say three million dollars ... he produces, he employs people and he pays taxes but has no entitlement to the pension. Jim who is also 70 owns a three million dollar home, has cash in the bank and is entitled to a full pension. So Jack who is a taxpaying productive member of the community is entitled to nothing ... Jim who does nothing but warm the couch is entitled to a full pension. Neither political party will ever change this because the pension vote is too large but it is so wrong on every level. You want more houses for the young. Means test the family home. The government shouldn't reward the productive but more importantly, it shouldn't reward the nonproductive. Cheers, Peter

Paul Dwyer
June 8, 2022 9.04pm

A good answer Paul.

I would note that, if Henry decides to stay where he is, the Pension Loan Scheme (now known as Home Equity Access Scheme) will only provide a maximum of $744 p/f for a full pension couple.

If Henry has a greater need, the traditional reverse mortgage will provide a higher amount.

Henry should speak with an experienced reverse mortgage adviser who can give guidance on all product options.

Marianna Gidsro
June 9, 2022 3.50pm

I will be 66 in September and can apply for the pension in March next year , I want to downsize as well , my worry is if I sell my home and buy a small home I will have money left in the bank , which means I cannot receive the pension , is that correct . How much money can I have in the bank to receive the pension please

Money magazine
June 9, 2022 3.58pm

Hi Marianna,

You can learn more about the pension assets test here:


- Money team

Val Helen
June 10, 2022 10.44am

Story time, folks... My parents, who've been 'self employed' my entire life, bought an amazing block of land many years ago. It was large, had it's own little rainforest, close to the beach/waterfall/quaint shops and not far from a major city. They sold their old home, built a big new home on the block while relying on the pension and benefits to support them. Fast forward many years and my parents' property has grown extremely valuable and desirable - but not their relationship which broke down in spectacular fashion. To this day, they bicker about the property they refuse to sell but can't maintain, while holding dearly to their pensions having let go of their family. I wonder, if they had more education on selling their property and the pension, they would be happier and most likely better off in the long run. Sometimes, a house is not where the home is.