Asset testing the family home... I don't get it!

[witches*wol]

Ok so some bright spark has suggested the Gov look at asset testing the family home.

So let's pretend that the fist $500K is exempt and anything over that is considered an asset.

So now pretend that my home is valued at $700K which is $200K over the exempt amount.

Now what the hell am I supossed to do about that $200K?  I can't just sell off $200K of my house can I?  (I can see the realestate ad now "For Sale 1 Back Yard and Garage along with half the letterbox $200K ")

What would happen, would the Gov perhaps halve my pension?   People struggle to live on the full pension now, there is no way they could live on half a pension.

Would people be expected to sell their home and then of course they'd have to live off the proceeds of the sale of their house.

Would they then be expected to rent (The house nextdoor to me is a tiny old house and it rents for $450 a week - wont take long to eat away at the money from the sale of the house with a rent of $23,400 per year.)  Or would people be expected to move to the country in order to buy another home under whatever the thresehold is?  (I'm in Vic and there is nothing around us that is less than $500K and I am a good 27kms from the city)

Like I said in the subject line "I don't get it!"   Am I being synical in thinking the Gov do expect the elderly to sell up the family home and rent or move bush or am I missing something?

[the_hawk*]

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@freshwaterbeach wrote:

At the moment the family home is excluded from the asset test used to calculate eligibility for the aged pension, and the Grattan Institute recommended removing this exclusion. People who failed the asset test due to the value of their dwelling would be allowed to receive the aged pension, but they would accumulate a debt to the government, to be paid when the home was transferred or sold — in effect, the government would provide a no-interest reverse mortgage. Grattan reckoned this would save $7 billion a year.

________________________________

Indian givers.

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yes I agree, it was never the governments asset and the person who owns this property has already paid more than their fair share of taxes while working, some of these taxes have been collected on the false pretence of paying for pensions just as future people will pay for their pensions when the time comes.

Any plans along these lines will simply make people question why should we go without to provide ourselves with a house when its going to be taken from us.

why not sell it now, retire early and live it up and then arrive at pension age with no assents just like all the people who chose to rent and never have had any responsibility and have collected rent assistance and an easy ride their whole lives.

It is only the security home ownership gives people the motivation to buy a property, it is far cheaper to rent and you have no worries, seems silly to do the hard yards for nothing  

[fourandsixpants]

replying tohawk ref.

..."yes I agree, it was never the governments asset and the person who owns this property has already paid more than their fair share of taxes while working, some of these taxes have been collected on the false pretence of paying for pensions just as future people will pay for their pensions when the time comes.

Any plans along these lines will simply make people question why should we go without to provide ourselves with a house when its going to be taken from us.

why not sell it now, retire early and live it up and then arrive at pension age with no assents just like all the people who chose to rent and never have had any responsibility and have collected rent assistance and an easy ride their whole lives.

It is only the security home ownership gives people the motivation to buy a property, it is far cheaper to rent and you have no worries, seems silly to do the hard yards for nothing"

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and the thought crosses one's mind that asset growth in one's home might be an alternative to putting it into the superann. casino and where unscrupulous operators 'dip in' and where govt legislation keeps changing AND GFC's and such events turn the apple cart upside down and most importantly - something to leave/help out the kids.........don't think any kids will appreciate a bill!!

What if the home has 2nd/3rd etc mortgages on it and even after sale, probate etc there's a bill to be paid by the remaining living?!  

[the_hawk*]

the bottom line is if they mess around with peoples homes it will start a chain of events that will end really bad for the goverment in the short and long terms.

Many years ago one silly government changed the tax laws regarding negitive gearing so people could no longer claim the costs of buying a rental property against their regular income, yes all the poor were happy that the rich no longer had this tax advantage

The idea sounded great and it was a way of taking from the rich landlords this was back in the 70s, the result was anything but expected.

Tthe landlords no longer getting a tax brake via negative gearing simply sold their rentals and invested else where, the result of a sudden loss in the number of rentals saw the demand go sky high along with rents.

The law was changed back within months but took years for the market to get back to any thing like it was prior to the changes leaving many people homeless and living with relatives.

Many changes are not thought through properly and what sounds great on the surface have very serious consequences into the future  

[i-once-was-bump]

What about those who spend every cent they earn on nonsense things such as gambling, drinking, cigarettes and holidays and then when they get to 65 they have no assets, want a government house and a pension?

Why punish those who choose to get ahead financially?

[lakeland27]

why punish anyone for that matter

[the_hawk*]

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@i-once-was-bump wrote:

What about those who spend every cent they earn on nonsense things such as gambling, drinking, cigarettes and holidays and then when they get to 65 they have no assets, want a government house and a pension?

Why punish those who choose to get ahead financially?

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that is exactly right bump, why bother doing it hard to get ahead if there is no benifit in latter life, we may as well all spend up big and have a long party