Selling the family home

Selling the family home often provides the funds needed to pay a Refundable Accommodation Deposit (RAD), either in full or in part. Paying the RAD in full removes the Daily Accommodation Payment that would otherwise apply to the unpaid balance. Paying part of the RAD reduces the DAP but does not remove it entirely.

For residents covered by the accommodation arrangements introduced on 1 November 2025, retention amounts may be deducted from a RAD over time, meaning the full original amount may not be returned. Daily accommodation payments may also be indexed. The applicable rules depend on the resident’s entry date and accommodation arrangements.

However, selling has consequences beyond the immediate cash. Once the home is sold, any proceeds retained as cash or investments may become assessable. Amounts used to pay an accommodation deposit can be treated differently, so the result depends on what happens to the sale proceeds rather than the sale alone. The timing of the sale can also affect the outcome, so families should compare the consequences before entering care or listing the property.

Keeping the home vacant

Some families choose to keep the home vacant while other matters are resolved, such as a slow property market, unresolved family disagreements, or uncertainty about long-term needs. Keeping the home vacant may preserve flexibility while the family considers its longer-term options, but it does not necessarily mean the property will be excluded from the aged care means assessment. Unless a protected person lives there, part of the home’s value may be included up to the applicable home-value cap. Different rules may apply to the home under the Age Pension assets test, so both assessments need to be considered separately.

Holding the home vacant also means ongoing costs: council rates, insurance, maintenance and utilities, with no income to offset them. Families generally need to weigh these carrying costs against the value of preserving flexibility while a longer-term decision is made.

Renting the home out

Renting the family home can produce income to help meet aged care costs while allowing the family to retain the property. However, the rental income may be assessed for pension and aged care purposes, and part of the home’s value may also be included in the aged care means assessment unless a protected person lives there.

The financial benefit therefore depends on the rent received after property costs, any relevant tax consequences, and changes to pension entitlements or aged care contributions. This option can work well for families wanting to preserve the home as an asset while generating cash flow, but it needs to be calculated carefully rather than assumed.

A spouse or protected person remains in the home

Where a spouse or another protected person continues to live in the home, the property may receive favourable or exempt treatment under the relevant pension and aged care assessment rules. This can significantly change the financial picture, since it may mean the home does not need to be sold or drawn on to pay accommodation costs at all.

A protected person can include the resident’s partner, a dependent child, a carer who has lived in the home for at least two years and is eligible for an Australian Government income support payment, or a close relative who has lived in the home for at least five years and is eligible for an income support payment. Confirming whether someone in the household meets this definition is an important first step, because it can open up options that would not otherwise be available.

Using other assets to pay accommodation costs

Selling the home is not the only way to fund a RAD. Some families use superannuation, term deposits, shares or other investments instead, either to pay the RAD in full, to pay part of it as a lump sum with the balance paid as a DAP, or to pay the full amount as a DAP funded from income.

Each of these choices affects cash flow, pension entitlements and means-tested aged care fees or contributions differently. Paying a RAD in full may preserve more income for daily living, while paying by DAP preserves capital but reduces available income. The right mix generally depends on the family’s broader asset position, income needs and estate planning goals.