Should You Sell the Family Home?

Why this decision matters so much

For many families, the family home is the largest asset available to pay the RAD. Selling it frees up hundreds of thousands of dollars — but it's irreversible, emotionally charged, and has significant implications for the Age Pension, aged care means testing, and the family's financial future.

There is no one-size-fits-all answer. But understanding the rules can help you make an informed decision.

The 2-year home exemption

When someone enters residential aged care, their former home is exempt from the aged care assets test for 2 years. After 2 years, it becomes an assessable asset (capped at a set amount for means testing purposes).

This means:

• For the first 2 years, keeping the home doesn't increase your means-tested care fee
• After 2 years, the home's value (up to the cap) is counted in the assets test, potentially increasing fees
• This 2-year window gives families time to make a considered decision rather than a rushed one

If a spouse or partner still lives there

If the person entering care has a spouse, partner, dependent child, or carer who has lived in the home for 2+ years, the home is permanently exempt from the aged care assets test.

This is a critical rule. If a spouse remains in the home, do not sell it for the purpose of paying the RAD — the exemption makes it far more valuable as an exempt asset. Selling converts an exempt asset into assessable cash, which can dramatically increase means-tested fees and reduce pension entitlements.

Option: Rent the home instead of selling

Renting out the home is a middle ground many families choose:

• Rental income can help cover DAP or other aged care costs
• The home is preserved for the family or the estate
• Capital growth continues — in many Australian markets, the home appreciates over time
• But: rental income is assessable for both the Age Pension and aged care means test. The home also loses its exempt status if no protected person lives there (after the 2-year grace period).

Pension impact of selling

Selling the home and depositing the proceeds has major pension implications:

• If the home was exempt (spouse living there or within 2-year grace period): selling converts an exempt asset to an assessable one. This can reduce or eliminate the Age Pension.
• If proceeds are used to pay RAD: RAD is exempt from the Age Pension assets test — so paying a RAD can actually help preserve pension eligibility.
• If proceeds sit in the bank: They're fully assessable for the pension. A large bank balance can significantly reduce the pension.

This is where specialist advice is essential. The interaction between the family home, the RAD, the pension, and the aged care means test is complex.

Read more about pension impacts →

The emotional dimension

Numbers aside, selling the family home is deeply emotional. It often represents the last tangible connection to a parent's independent life. Many families feel guilt about selling "mum and dad's house."

There's no right answer on the emotional side. But know that many families choose not to sell immediately — paying DAP or a partial RAD from other sources while they take time to decide. The 6-month RAD payment window and the 2-year home exemption both give you breathing room.

What to do

• Don't rush. You have 28 days to decide on RAD vs DAP, 6 months to pay the RAD, and 2 years of home exemption. Use this time.
• Get a means test assessment from Services Australia (Centrelink) before making any decisions about the home.
• Talk to a specialist aged care financial advisor. The interaction between home, pension, RAD, and means testing is too complex for general advice. Aged care financial advice typically costs $2,000–$5,000 and can save tens of thousands.
• Consider all options: keep the home, rent it out, sell it, or use other assets (super, investments) for the RAD.

Model different scenarios with the calculator →