Selling the Family Home for Aged Care – What You Need to Know Before Making the Decision
Moving into residential aged care is one of life’s biggest transitions, both emotionally and financially. For many families, one question rises to the top: Do we need to sell the family home when entering aged care?
It’s an understandable concern, especially as the family home often represents decades of memories, financial security and future inheritance. It can also be one of a family’s most valuable assets, making the decision to keep or sell it feel overwhelming. The good news is that there is no one-size-fits-all answer. Whether selling the family home is the right choice depends on several personal and financial factors, including aged care fees, Age Pension entitlements, cash flow needs, family circumstances and long-term estate planning objectives. Understanding how these factors interact before making any decisions can help you avoid costly mistakes and ensure your loved one’s financial position remains as strong as possible.
Do You Have to Sell the Family Home When Entering Aged Care?
Many families initially assume that selling is the only way to fund accommodation costs or ongoing care fees. However, there are several ways to structure aged care finances, and the most appropriate option depends on your individual circumstances. In some situations, retaining the home may provide greater flexibility, particularly if a protected person, such as a spouse or another eligible family member, continues living there. In other cases, selling the property may simplify finances and provide funds to meet accommodation costs more comfortably.
Because every situation is different, it’s important to understand how the family home is treated under the aged care means-testing rules. These rules help determine what you may contribute towards your care and accommodation and are only one part of the overall financial picture. Rather than focusing solely on whether you can sell the home, it’s often more valuable to ask whether selling it supports your broader financial and family goals.
How Keeping or Selling the Home Can Affect Your Financial Position
The decision to retain or sell the family home has implications that extend well beyond the property itself. It can influence aged care costs, retirement income, investment opportunities and your family’s longer-term financial security.
When assessing aged care costs, the government considers a person’s financial circumstances through a means assessment. Depending on your situation, some or all of the home’s value may be counted when calculating certain aged care fees, while other assets and income are also taken into account. Accommodation payments, ongoing care fees and other costs can all be affected by your overall financial position, making it important to understand how different decisions may influence the outcome.
Keeping the home may allow it to remain within the family while providing opportunities to generate rental income. Rental income can help contribute towards aged care costs, although it may also affect Age Pension entitlements and other financial assessments. At the same time, retaining ownership means continuing to manage maintenance, insurance, council rates and other ongoing property expenses. Families should also consider who will oversee the property and whether it remains practical to keep over the longer term.
Selling the home creates a different set of opportunities and considerations. It can provide immediate access to funds that may be used to pay a Refundable Accommodation Deposit (RAD), reduce ongoing accommodation payments or invest surplus funds to generate income. However, receiving sale proceeds may also affect Age Pension eligibility and the assessment of financial assets. While the sale of a principal residence is generally exempt from Capital Gains Tax, the way sale proceeds are invested afterwards can have taxation and investment implications that should be carefully considered.
Rather than assuming one option is always financially better, families should consider how each choice aligns with their broader objectives, future cash flow needs and desired level of financial flexibility.
Questions to Ask Before Making a Decision
Before deciding whether to keep or sell the family home, it helps to step back and consider the bigger picture rather than focusing solely on the immediate costs of entering aged care.
Some useful questions include:
- Will someone continue living in the home?
- Would renting the property provide reliable income without creating unnecessary complexity?
- What are the ongoing maintenance and ownership costs?
- Will sufficient cash be available to comfortably fund aged care costs?
- How could the decision affect Age Pension entitlements?
- What impact could it have on future estate planning and beneficiaries?
- Does retaining or selling the property align with the family’s long-term financial goals?
These conversations often involve more than financial considerations alone. Family dynamics, health circumstances and personal wishes all play an important role in determining the most appropriate path forward.
Why Personalised Aged Care Advice Matters
No two aged care journeys are the same. A strategy that works well for one family may be completely unsuitable for another.
Factors such as total assets, investment income, family circumstances, health needs, estate planning objectives and future care requirements all influence whether retaining or selling the family home is likely to produce the best outcome.
Making decisions without understanding the broader financial consequences can sometimes lead to unnecessary aged care costs, reduced government benefits or missed opportunities to improve long-term financial security. Coordinating aged care advice with broader financial planning allows families to consider all available options before making significant decisions, helping ensure that the chosen strategy supports both immediate care needs and future financial wellbeing.
What Now?
Selling the family home is often one option when entering residential aged care, but it is rarely the only option.
Understanding how the decision may affect aged care fees, Age Pension entitlements, cash flow, investments and estate planning can make a significant difference to long-term financial outcomes. By taking the time to explore the available options before acting, families can make more confident decisions that reflect both their financial circumstances and personal priorities.
Whether you ultimately decide to retain the property or sell it, having a clear understanding of the broader financial implications can help ensure the decision supports your loved one’s ongoing care and your family’s future goals.
If you or a family member are considering residential aged care and you’re unsure whether selling the family home is the right decision, the experienced Aged Care advice team at Priority Advisory Group can help. We work with families to understand the financial implications of each option and develop strategies tailored to their individual circumstances. Contact our team on 1300 349 188 to arrange a discussion.
Please note the information provided within this article is general of nature and is not a personal advice recommendation. Prior to considering strategies discussed in this article we recommend you seek personal financial advice. Please be aware that, without the benefit of financial advice, you may be committing yourself to financial strategies or products that are not appropriate for your overall personal situation, needs and objectives.