Residential Care Subsidy Asset Threshold NZ: Current Limits and What Counts

The Numbers That Determine Whether You Pay or the Government Pays

When a parent needs rest home care in New Zealand, the first financial question is whether they qualify for the Residential Care Subsidy. The answer hinges on the asset test, a strict calculation that measures the applicant's total countable assets against a statutory threshold set by the Ministry of Social Development.

If assets fall below the threshold, the applicant qualifies for the subsidy (subject to the income test). If assets exceed it, the family pays privately until assets deplete, or applies for the interest-free Residential Care Loan if the family home is the reason they are over the limit.

Current Asset Thresholds (Effective 1 July 2026)

The thresholds are adjusted annually by CPI. From 1 July 2026:

The critical difference between Option A and Option B is whether the family home and personal vehicle are included. Under Option A, the home and one vehicle are completely excluded from the assessment, but the threshold is lower at $164,731. Under Option B, the home and vehicle are included, but the threshold is the higher $300,811.

For most couples where the family home is worth more than roughly $136,000 (the gap between the two thresholds), Option A is the better choice because excluding the home saves far more than the lower threshold costs.

What Counts as an Asset

Work and Income casts a wide net when tallying countable assets. The assessment includes cash in bank accounts and term deposits, shares, bonds, managed funds, and KiwiSaver balances, investment properties and commercial land, holiday homes, loans owed to the applicant by other people (including family members or trusts), property held under a Licence to Occupy or Occupation Right Agreement in a retirement village, and the value of any business interests.

For single applicants and couples who are both in care, the family home and personal vehicle are also counted.

What's Exempt

The asset test excludes personal effects, clothing, and private jewellery, standard household furniture and domestic effects, pre-paid funeral expenses up to $10,000 per person (provided they are held in a recognised funeral plan), and under Option A, the principal family home and one personal vehicle.

Common Assets That Families Forget to Count

Several asset categories consistently catch families off guard during the assessment.

KiwiSaver balances. Even though KiwiSaver cannot be withdrawn before 65 (with limited exceptions), the full balance is a countable asset for the means test. A couple with $80,000 each in KiwiSaver starts the assessment with $160,000 before any other assets are counted.

Loans to family members. If a parent lent $50,000 to a child for a house deposit and that loan is still outstanding (even informally), it is a countable asset. The loan only stops counting once it is formally forgiven within the gifting limits.

Retirement village ORAs. An Occupation Right Agreement is valued at the estimated termination proceeds, not the original purchase price. Deferred management fees typically reduce the payout by 20% to 30%.

Trust debt-backs. When a family home was sold to a trust at fair market value with the trust owing a debt back to the settlors, the outstanding balance of that debt is a countable asset belonging to the applicant.

How Work and Income Verifies Assets

MSD uses automated data-sharing with Inland Revenue to cross-reference declared assets against tax filings. Interest income, dividend distributions, trust earnings, and property transactions are all verified. If declared assets don't match the income they generate, the assessor will investigate.

The ministry also conducts a retrospective gifting audit covering at least five years. Any assets transferred below market value, gifts to family, or loans forgiven are reviewed against the annual gifting limits ($8,500 per year per couple within five years). Excess gifting is added back to the asset total as "deprivation of assets."

Bank statements are the primary evidence. Work and Income requests three months of statements for every account held by the applicant and their partner. Unexplained large withdrawals or transfers will be queried, and the onus is on the applicant to explain them.

The Residential Care Loan Alternative

If the only reason an applicant exceeds the threshold is their family home, they may qualify for the Residential Care Loan. This interest-free loan is paid directly to the care facility and secured by a caveat on the property title. To qualify, the applicant must have lived in the property, and their other liquid assets must be under $15,000 (single) or $30,000 (couple).

The loan is repaid within 12 months of the resident's death or upon the property sale, whichever comes first. It prevents the forced, rushed sale of the family home during a vulnerable time.

What to Do Before the Assessment

Gather three months of bank statements for every account, the most recent valuations for any property (including retirement village ORAs), KiwiSaver and managed fund statements, a list of any loans you have made to others, and trust deeds plus financial statements if assets are held in trust.

The NZ Residential Care Subsidy Guide includes an asset calculator worksheet that walks through each category, helps you estimate whether you are above or below the threshold, and prepares you for the MSD financial means assessment.

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