with SMI Financial Solutions
It seems like all people can talk about at the moment is how the Federal Budget affects investment properties, so we thought it was an ideal time to tackle the question of, “How an investment property affects your Age Pension eligibility”.
Many people believe that owning an investment property excludes them from being eligible for the Age Pension, however, depending on the make-up of your other income and assets, that may not be true. Let’s see how the assets and incomes test are applied…
From an asset perspective, Centrelink will look at the value of your property and take away the value of any loan which is secured against that property. For instance, if you have a property valued at $600,000, and lending on your investment property of $200,000, this will reduce the value of the property to $400,000 in the assets test.
In the income test, Centrelink will assess the rental income less deductions, however not the same deductions as the ATO would use for your tax. Centrelink will not count depreciation, capital works costs or lending costs.
Additionally, negative gearing is not counted, so if your property is running at a loss, the income will be considered to be $0. In any case, if you are not earning other income, the amount that you are earning off your investment property may still be under the income test allowance.
If you would like to chat to one of our expert team regarding your eligibility for the Age Pension, please give us a call on 1300 222 484
PHOTO: istockphoto.com
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