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Aged Care and the Extended Land Use test

Eligible farmers with a long-term attachment to their land have been eligible for the “extended land use test”, where land that exceeds 2 hectares on the same title as their principal residence, is considered part of their principal residence and exempt under the assets test.

To qualify for the extended land use test, several eligibility criteria must be met including:

  • 20-year attachment. To meet this criterion, the farmer must:
    • Own the principal home.
    • Have lived in the principal home continuously for a period of at least 20 years.
    • Only land on the same title as the principal residence is exempt.
  • Effective land use. This can be satisfied in several ways including:
    • Working the land to its potential (or a close family member working the land to its potential)
    • Leasing the land
    • Not working the land if it has limited potential to generate income (e.g., rural residential block).

How is the land assessed if a farmer needs to go into residential aged care?

If a farmer who has their land exempted under the extended land use test enters aged care, the land continues to be assessed as their principal residence under the aged care rules.

Single Person

For aged care purposes, if a protected person does not reside in the former home, the capped value of the former home (and land) is assessable under the means tested amount calculation (currently $173,075.20).

A protected person includes the following:

  • Partner or dependent child (under 16 or a full-time student under 25)
  • Carer who has resided in the home for 2 years and is eligible for an income support payment.
  • A close relative (parent, sibling, child, or grandchild) who has resided in the home for 5 years and is eligible for an income support payment.

Couples

For aged care purposes, as the partner is a protected person, the former home is exempt for as long as their partner remains in the home. When there is land exempted under the extended land use test, the value of the house and land is exempt for both members of the couple.

If the partner then leaves the former home (i.e., due to death or entering aged care themselves), if another protected person does not reside in the former home, the capped value of the former home ($173,075.20) is assessable under the means tested amount calculation.

Author
Certified Financial Planner ® | B.Bus | Dip.Bus | Authorised Representative No. 314983

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