Why the home matters so much
The family home is often the largest asset an elderly Australian owns — and how it is treated by the aged care assets test can make a difference of thousands of dollars per year in means-tested care fees.
Unlike most assets, the family home enjoys special exemption rules that can exclude its value from the assets test entirely — or include it, depending on what happens to the property.
Exemption rules by situation
| Situation | Assets test treatment |
|---|---|
| Partner still living in the home | Exempt indefinitely |
| Other protected person living there | Exempt while they remain |
| Home vacated and not rented | Exempt for up to 2 years |
| Home rented out | Included immediately; rental income assessable |
| Home sold | Proceeds included immediately |
The 2-year rule
If your parent vacates their home and leaves it empty (not rented), the home value is exempt from the assets test for up to 2 years. After 2 years, the property value is included regardless of whether it has been sold.
Renting vs selling
| Renting out | Selling | |
|---|---|---|
| Assets test impact | Home value included immediately | Sale proceeds included immediately |
| Income test impact | Rental income assessable | No ongoing income impact |
| Flexibility | Home retained; can be sold later | Capital realised but home lost |
Couples: one partner in care
When one partner enters aged care and the other remains at home, the family home is exempt from the assets test indefinitely — as long as the partner continues to live there. See our couples guide for more.
Impact on the means-tested care fee
To illustrate the financial impact, consider a home valued at $800,000:
| Scenario | Additional annual MTCF |
|---|---|
| Home exempt (partner living there / vacated < 2 yrs) | $0 |
| Home included ($800k − $59.5k × 17.5%) | ~$129,588 → capped at $33,309 |
Use our free calculator to model different scenarios based on your specific situation.