So, had my old Italian tiler came over to do some work a few weeks ago...i haven't seen him for a while... I know he owns at least 1 PPOR and a neighbouring IP in an area where the median house price is more than a million..and i am sure he has stash of cash somewhere.. Guess what! He told me he is now receiving err....the old age pension! What the $"%%&! and all his mates are too! He also told me he has sold his IP... I did not want to probe but anyone hazard to guess what he did to get the pension? The only thing i can think of is he may have upgraded to a super expensive PPOR mortgage free, keep an fully offset account for availability of funds, have some cash under the mattress?? maybe?....man...this is some loophole ...err..i mean strategy.. (Pls spare the ethics side of it)
BTW i was torn between posting this under this section or under "Innovative strategies /techniques" section Just so you know, i do wrestle with these things!
Is it in his name, joint names, in trust etc? A couple can have around $700k iirc before affecting their pension. He could be getting his Italian pension if he worked overseas before emigrating.
Currently you can have something like about $1.3mil in assets (excluding ppor) as a couple before filling losing the age pension. In Jan this is dropping to about $850k So if he (and his wife) sold the IP for $1mil and they had few other assets then yeah, he could still be eligible for the pension. Plus he may have used that cash to pay off debt, and upgrade to an expensive poor, thus effectively clearing away assesed assets - and thus remaining eligible for the pension. Really though this is all speculation as we don't have the facts of his full financial position. Blacky
Random guess - he bought property for his kids. I know a few people that do that - living will or something where they give away their assets to family and then the family looks after the olds.
My parents got caught by the new Part-pension threshold and will have their pension cut completely. This is an issue for them because they have a very low income stream that is below their cost of living. The asset they are holding is an IP in Melbourne that they bought cheap years ago but it has increased a lot in value due to the latest boom. However, rents have not kept up which means the rental yield on capital value is less than 2.5% (roughly). They have no choice now but to sell their only IP because if they don't they won't have enough money to live on. For a homeowner (couple) the 2017 asset limit for the full pension is $375,000 For a homeowner (couple) the 2017 asset limit for the part pension is $816,000 Note their IP has been valued by the VGO and may not achieve the VGO valuation at market. Maybe my parents need to speak to @virgo's tiler?
He is definitely getting the Aussie pension... What do you mean by first paragraph? Are you saying that if assets are in trust/joint names, they are exempted from Asset Pension Test? can you give a numerical example?
Eg Luigi owns 20% each with his wife 20% & 3 kids. So his share is only $200,000 If in a trust, he is not the beneficial owner nor certain of receiving payment annually.
If a trust involved he needs to pass the source test and the control test otherwise he will be assessed as if it is his own property.
If his partner is under 65 years old he could stash cash in her super fund and it will be shielded from being assessed by Centrelink.
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