Ask Paul: Should my in-laws sell their house to pay for aged care?


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Q. My parents-in-law, aged 80-plus, face the issue of what to do next. They own their home and get a small pension, but time is catching up with them, so what to do?

If they move to a retirement home, do they sell their house to pay entrance fees or rent it out to cover the costs?

What is the best way forward, as we don't want to get it wrong?

paul clitheroe aged care

I got lots of information but it just adds to my confusion. Some clear directions and consequences would be appreciated. - Mareee

A. Hi, Maree. This is a really hard one. My wife Vicki and I, along with most of our friends, have had to deal with this situation. And it is really complex.

First, there are quite a number of "aged" advisers in the marketplace. Some, I fret, are flogging solutions, but quite a few of the fee-charging ones are there to answer the questions you have.

So I cannot answer your question as an expert. I can only give you my personal experiences. We, and most of our friends, have tried to keep our parents at home, barring debilitating illness.

As part pensioners, yours will qualify for the government's reverse mortgage scheme if a little more week-to-week money would help.

The overarching solution to age is to assist people stay at home for as long as possible. So check out all the packages that will assist your parents to do this.

As I am keeping this personal, I am happy to share Vicki's and my plans with you.

We will stay at home as long as possible and will use our assets to bring in extra assistance as needed. Community services are available to help you do this, if needed.

When the time comes - and it will probably be our kids having to do this - we hope not to leave until we are assessed for high care, which can be covered with a government-guaranteed and refundable bond.

At that stage the house may need to be sold, or used as security to cover the bond.

Others may disagree; we respect that. But this is what we and many of our friends did to help our parents live the best life possible. There is no perfect plan for age, except not getting old!

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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. Click here to ask Paul your money question. Unfortunately Paul cannot respond to questions posted in the comments section. Please view our disclaimer here.
October 13, 2019 11.26pm

I am 69 and retired my wife is 51 and still working, we have a property in our SMSF. If we sell that property which is a vacant block of land and buy another property How much, if any capital gains tax do we have to pay.

Money team
October 14, 2019 10.54am

Hi Peter,

Thank you for your comment. Unfortunately Paul cannot reply to comments. We will pass your question on to him for consideration in the Ask Paul section of Money magazine.

- Money team