Aged Care and the Family Home: What You Need to Know What is a Family Trust, and Do You Need One?

By Dennis Spiroski, Senior Financial Adviser, Aged Care Specialist, Navigate Advisory

“Mum needs to go into aged care. Do we need to sell the family home to pay for it?”

It’s a question we hear often. Whether it’s mum, dad or another elderly loved one, the financial side of aged care decisions leaves a long-lasting mark on family wealth.

And the family home sits right at the centre of it: the largest asset, the most emotionally loaded, and the decision families wrestle with most.

How the family home is assessed for aged care

When someone moves into residential aged care, Services Australia works out their contribution based on income and assets. For most families, the home is the biggest asset on the table. So how it’s treated matters enormously.

The home isn’t counted at its full value. There’s a cap.

As of 20 March 2026, only the first $214,884 of the home’s value counts toward the aged care means assessment, no matter what the place is actually worth. You can check the current cap on My Aged Care.

Your four options with the family home

There are four things you can do with the home. Each one is treated differently.

1. Someone stays living in it (the protected person rule)

This is the big one. If a “protected person” is still living in the home, it’s completely exempt from the aged care means assessment. Not capped. Exempt. Zero.

A protected person is:

Your spouse or partner
A dependent child
A carer who has lived in the home for at least two years and qualifies for a Centrelink income support payment
A close relative who has lived in the home for at least five years and qualifies for a Centrelink income support payment

So if Dad goes into care and Mum stays in the family home, the house doesn’t count at all while she’s there. This is the single most valuable thing to get right, and it’s where families accidentally cost themselves a fortune by selling too soon.

2. Leave it sitting empty

If the person going into care is single and the home is left vacant, it’s exempt from the assets test for two years. After that, the capped value ($214,884) gets counted.

So there’s no rush. You have breathing room to make a clear-headed decision rather than a panicked one.

3. Rent it out

You can rent the home and keep it in the family. Two things happen when you do.

The home’s capped value still counts as an asset. And under the current rules, the net rent counts as assessable income for both your aged care fees and any Age Pension.

Renting can also affect the main residence capital gains tax exemption later on. That’s a conversation for your accountant before you list it, not after.

4. Sell it

You can sell, and many families do. But here’s the trap, and it’s a big one.

The moment you sell, the full sale proceeds become assessable. The home was capped at $214,884. The cash from selling a $1.5 million home counts at the full $1.5 million.

In plain terms, selling the home can actually increase the assessed assets and push the care fees up. That’s the opposite of what most families expect. Sometimes selling is the right call. Often it isn’t. The numbers decide, not the panic.

Navigate Advisory

Aged Care and the Family Home

Your family’s 4 options

As at 20 March 2026, only the first $214,884 of the home’s value counts toward the aged care means assessment, no matter what the place is actually worth.

Source: My Aged Care

Someone stays in it

A spouse or other protected person keeps living there.

Not counted at all

Leave it empty

The home sits vacant after the move into care.

Exempt for 2 years

Rent it out

Keep the home in the family and bring in a tenant.

Rent counts as income

Sell it

Cash in the home to help fund a place in care.

Full value counts

Run the numbers before you decide. The right option depends on your full picture. navigateadvisory.com.au

You don’t need a lump sum to get a room

A lot of the pressure to sell comes from one number on the paperwork: the accommodation cost, often quoted as a large lump sum called a Refundable Accommodation Deposit (RAD).

Here’s what families miss. You don’t have to pay it as a lump sum.

You can pay the accommodation cost three ways: as a RAD (lump sum), as a Daily Accommodation Payment (DAP, a daily fee instead), or as a mix of both. Choosing the daily option means you don’t need to find hundreds of thousands of dollars upfront, which means you don’t need to sell the house to raise it.

The daily rate is set by a government interest rate (8.36% as at March 2026), so it isn’t free money. And from 1 November 2025, providers can keep up to 2% of a RAD per year for up to five years.

For a Sydney family sitting on a home well above the cap, the combination of the cap limit and the daily payment option often means the home can stay in the family far longer than anyone first assumed.

Modelling the different options, using your family’s specific situation and fees for the facility is the only way to determine the right aged care fee structure.

The traps that cost families the most

A few things catch people out again and again.

Gifting the house to the kids. Transferring the home to family within five years of entering care triggers deprivation rules. Services Australia can still count it as though you own it. It rarely works the way people hope.

Forgetting about capital gains tax. Selling or renting can have CGT consequences depending on how long the home was your main residence.

Treating the pension and aged care rules as the same. They aren’t. The protected person exemption applies to aged care fees, but is treated differently for the Age Pension. Getting one right and the other wrong is common.

Deciding in a crisis. The two-year exemption exists for a reason. You almost always have more time than it feels like in week one.

Make informed aged care decisions

Families have options, and the worst time to weigh them up is in the middle of a crisis.

Before anyone signs anything or lists the house, run the numbers and bring in the right people. A financial adviser to model the fees, the funding and the pension. An accountant for the tax and how the home is held. An estate planning solicitor where the will or power of attorney comes into play.

Informed decisions protect both things that matter here: the care your loved one receives, and the wealth your family has spent a lifetime building.

Dennis Spiroski is a Senior Financial Adviser at Navigate Advisory, helping families take the stress and emotion out of aged care decisions, safeguard their wealth, and plan for what comes next. Book a 15-minute introductory chat at navigateadvisory.com.au/contact.

Navigate Advisory has offices in Balmain, Brighton-Le-Sands and Hurlstone Park.

Frequently Asked Questions

No. The Australian Government cannot force you to sell the family home to fund aged care. It can count part of the home’s value in the means assessment, but you always have options including paying the accommodation cost as a daily payment, renting the home, or keeping it with a protected person living in it.

Only a capped amount of the home’s value is assessed. As at 20 March 2026, the cap is $214,884, regardless of the home’s actual market value.

A protected person is someone whose continued residence in the home makes it fully exempt from the aged care means assessment. This includes a spouse or partner, a dependent child, a carer who has lived there at least two years and receives income support, or a close relative who has lived there at least five years and receives income support.

It depends on the full picture. If you sell, the entire proceeds become assessable assets, while the home itself is only counted up to the cap. Renting keeps the asset capped but adds the net rent as assessable income and can affect capital gains tax later. Modelling both options before deciding is essential.

A RAD is a refundable lump sum you pay for your accommodation. A DAP is a daily fee you pay instead, calculated using a government interest rate (8.36% as at March 2026). You can pay one, the other, or a combination. Choosing the daily payment means you don’t need a large lump sum, so you may not need to sell the home to fund it.

Yes. The balance of the Refundable Accommodation Deposit is repaid to the estate, and the refund is guaranteed by the Australian Government. The provider must pay it within 14 days of sighting probate. For anyone entering care from 1 November 2025, up to 10% of the deposit can be retained over five years.

The daily fees, means-tested care contributions and any daily accommodation payments aren’t refundable. They cover care and accommodation as it’s used. Only the lump sum deposit is refundable, minus any agreed deductions and the new retention amount.

Yes, it can. Once the home is sold, the proceeds become assessable assets for the Age Pension, which can reduce or remove the payment. While the home is held, it is treated more favourably. This is one reason selling in a hurry can backfire on both aged care fees and pension entitlements.

Generally no. Gifting or transferring the home within five years of entering care triggers deprivation rules, and Services Australia can continue to assess the home as though it is still owned. It rarely produces the result families are hoping for and should never be done without advice.

For a single person entering care who leaves the home vacant, it is exempt from the assets test for two years. After two years, the capped value is included in the assessment. This two-year window gives families time to make a considered decision rather than rushing a sale.

Any advice provided in this article is general advice only and does not take into account the objectives, financial situation or needs of any particular person. It does not represent legal, tax, or personal advice and should not be relied on as such. You should obtain financial advice relevant to your circumstances before making any decisions.