Selling Your House on the Pension? Here's What Happens to Your Payment

Here's the good news upfront: if you sell your home and intend to buy, build or renovate a new one, the sale proceeds are exempt from the asset test for up to 24 months. This is called the "proceeds of sale" exemption, and it's specifically designed so pensioners aren't penalised while transitioning between homes.

During those 24 months, Centrelink treats the exempt amount as if it doesn't exist for asset test purposes. Your pension continues at the same rate (assuming nothing else changes). The exemption applies from the date of settlement — not the date you list the property or sign the contract.

However, the proceeds are still assessed under the income test via deeming. Centrelink assumes your sale proceeds earn income at the deeming rates — currently 0.25% on the first $60,400 (single) or $100,200 (couple combined), and 2.25% on amounts above that. For most pensioners, this deeming income is modest and won't significantly reduce your payment.

If you sell your home and don't intend to purchase another one — for example, you're moving into rental accommodation or into a family member's home — the situation changes significantly.

The full sale proceeds become an assessable asset immediately. As of March 2026, the Age Pension asset test thresholds for non-homeowners are $543,750 (single) or $693,500 (couple combined) for the full pension, and $1,004,500 (single) or $1,154,250 (couple combined) for a part pension. If your proceeds plus other assets exceed these thresholds, your pension will be reduced or cut off entirely.

The silver lining: non-homeowner thresholds are roughly $242,000 higher than homeowner thresholds. So even if the sale proceeds push your assets up, the higher non-homeowner limits provide a significant buffer. Many people who sell a modest home and become renters still retain a full or part pension.

If you move into aged care, different rules apply — the home may remain an exempt asset for up to 2 years, and the Refundable Accommodation Deposit (RAD) has its own assessment rules. Speak to a financial adviser before making aged care decisions.

If you don't want to sell but need extra income, consider the Home Equity Access Scheme (formerly the Pension Loans Scheme). This lets you borrow against the equity in your home to top up your income, up to 150% of the maximum pension rate.

For a single homeowner, that means you could receive up to approximately $1,633.05 per fortnight (your pension plus the loan top-up). The loan accrues interest at 3.95% per annum (as of March 2026), compounding fortnightly. You can take it as regular fortnightly payments or as lump sum advances up to 50% of the maximum annual rate.

The scheme is available to pensioners, self-funded retirees, and those on a part pension who own real estate in Australia. The loan is recovered when the property is eventually sold or from your estate. It's worth considering if you want to stay in your home but need more cash flow.

You must notify Centrelink within 14 days of settlement. Report the sale through your Centrelink online account, the Express Plus app, or by calling the Age Pension line on 132 300.

You'll need to provide: the settlement date, the sale price, any remaining mortgage amount, and your plans for the proceeds (buying a new home, renting, etc.). If you're claiming the 24-month exemption, you need to demonstrate your intention to purchase a new home — Centrelink may ask for evidence like property search activity or a statutory declaration.

If you don't report the sale and Centrelink finds out later (they cross-reference with land titles offices), you could face an overpayment debt plus a 10% recovery fee. Don't risk it — report promptly even if you're unsure of the impact. Centrelink will assess your situation and let you know the outcome.

If you're planning to sell, here are the key steps to minimise the impact on your pension:

1. Get a Centrelink estimate first. Before you list, call 132 300 or visit a service centre and ask for an estimate of how the sale will affect your payment under different scenarios (buy new home, rent, aged care).

2. Time your purchase carefully. If you're buying a new home, try to settle within the 24-month window. If you go over, the full proceeds become assessable assets immediately.

3. Consider the Downsizer contribution. If you're 55 or older, you can contribute up to $300,000 (each, so $600,000 for a couple) from your home sale into super. These contributions don't count toward your non-concessional contribution cap. However, the super balance will still be assessed under the assets and income (deeming) tests.

4. Don't try to give the money away. Centrelink's gifting rules mean any amount over $10,000 in a single financial year (or $30,000 over 5 years) is still counted as your asset for 5 years. Gifting large sums to family to stay under the asset threshold is a common mistake that doesn't work.