Family Home Exemption in the Aged Care Assets Test in Australia
Family Home Exemption in the Aged Care Assets Test in Australia
For most Australian families, the family home is the largest single asset. When a parent enters aged care, the question that drives more anxiety than almost any other is: will the house be counted in the means test? Will we have to sell it to pay for care?
The answer depends on specific circumstances — who still lives in the home, how long it's been vacant, and the home's assessed value. Understanding these rules before your parent enters care can save tens of thousands of dollars in fees.
How the Means Test Treats the Family Home
When Services Australia conducts the income and assets means test for aged care, the family home receives special treatment. It is not automatically counted as an assessable asset — but the exemption has conditions and limits.
The means test determines two things:
- For Support at Home: The co-contribution percentages your parent pays toward independence and everyday living services
- For residential care: The Hotelling Supplement Contribution (HSC), the Non-Clinical Care Contribution (NCCC), and whether your parent is asked to pay a Refundable Accommodation Deposit (RAD)
The higher the assessed assets, the higher the fees. Keeping the family home exempt — when legitimately possible — can significantly reduce your parent's ongoing costs.
The Protected Person Exemption
The family home is fully exempt from the aged care assets test if a "protected person" continues to live in it. Protected persons include:
- Your parent's spouse or de facto partner who remains living in the home
- A dependent child of the care recipient
- A close relative who has lived in the home continuously for at least five years immediately before the care recipient entered aged care, and who is eligible for an income support payment (such as the Age Pension, Disability Support Pension, or Carer Payment)
- A carer who has been eligible for an Australian Government income support payment for caring for the person entering care, and who has lived in the home for at least two years immediately before the care recipient entered care
If any protected person lives in the home, the property's full value is excluded from the means test for as long as they continue to reside there. This is an indefinite exemption — there is no time limit while a protected person is in residence.
The Two-Year Vacant Home Rule
If the family home is vacant — no protected person lives there — it remains exempt from the aged care assets test for two years from the date your parent enters care. After two years, the home's assessed value is included in the means test, potentially increasing your parent's aged care fees.
This two-year window gives families time to make decisions about the property: sell it, rent it, or arrange for a family member to move in. But once the two years expire, the exemption ends regardless of your intentions.
There are important interactions with the Age Pension:
- Age Pension treatment: Centrelink also applies a two-year vacant home exemption from the pension assets test. If your parent receives the Age Pension and the home is included after two years, it may reduce or eliminate their pension entitlement, which in turn affects their aged care fee calculations.
- Rental income: If you rent the property out, the rental income is assessed as income for both aged care and pension purposes from day one. The property itself may still be exempt for two years as the "former principal home," but the income it generates is not exempt.
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The Home Exemption Asset Cap
Even when the family home is exempt (protected person in residence or within the two-year window), there is a cap on the exempt amount. As of March 2026, the home exemption asset cap is approximately $214,884.
This cap works as follows: the first $214,884 of the home's assessed value is exempt from the means test. Any value above this cap is treated as an assessable asset. For example, if the family home is valued at $800,000 and is occupied by a protected person, $214,884 is exempt and approximately $585,116 is included in the assets test.
In practice, this means the family home exemption reduces the assessable asset value but does not eliminate it entirely for higher-value properties — even when a protected person is living there.
What This Means for Residential Care Fees
The family home's treatment directly affects residential care costs:
If the home is exempt (protected person or within two years): Your parent's assessable assets are lower, which may mean lower HSC and NCCC fees, and they may qualify as a "supported resident" who doesn't need to pay a RAD.
If the home is assessed (after two years, no protected person): The full value (minus the exemption cap) is counted, which typically pushes the resident into higher fee brackets. The NCCC begins when assessable assets exceed $532,055 and reaches its daily maximum of $107.32 at $1,023,454 or above.
If the home is sold: The proceeds become a financial asset (cash or investments) that is fully assessable with no exemption. This is why families sometimes choose to keep the home rather than sell it — even if it sits vacant — during the two-year window while they assess options.
Planning Ahead
The optimal approach depends on your family's specific circumstances, and professional financial advice is often worth the cost for complex situations. But understanding the basic rules equips you to ask the right questions and avoid costly mistakes.
Key decisions to make early:
- Is anyone eligible to live in the home as a protected person?
- If the home will be vacant, what is the plan before the two-year window closes?
- Would the property's value push your parent above key fee thresholds if it becomes assessable?
The My Aged Care and ACAT Assessment Guide includes a means test preparation chapter with a contribution breakdown worksheet, covering the family home rules, income thresholds, and fee calculations so you can estimate your parent's costs before the formal means test is conducted.
Get Your Free My Aged Care and ACAT Assessments: Navigating Australia's Aged Care System — Quick-Start Checklist
Download the My Aged Care and ACAT Assessments: Navigating Australia's Aged Care System — Quick-Start Checklist — a printable guide with checklists, scripts, and action plans you can start using today.