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Updated 10 November 2026 | Intergenerational planning, housing and aged care in Australia

Helping the next generation, keeping a home and paying for later-life care can pull family finances in different directions. A useful plan starts with the needs and choices of the person providing the money. It should also make clear what each family member is agreeing to and what happens if circumstances change.

This ebook examines assistance with home ownership, inheritances and decisions about the home when entering residential aged care. Family cooperation can help, but family members remain separate people with their own rights, debts, tax positions and objectives. A solution that benefits a child may reduce a parent’s ability to pay for retirement or care.

Start with people, then assets

Discuss what support is affordable, what money must remain available and whether help is intended as a gift, loan or ownership interest. Do not assume an expected inheritance will arrive at a particular time or amount. Health, care costs, relationships and investment values can change.

Ownership and inheritance

Joint tenants generally have a right of survivorship: a deceased owner’s interest passes to the surviving joint owner or owners. A tenant-in-common’s share generally forms part of their estate. The NSW Trustee and Guardian explanation shows why the ownership arrangement matters. Obtain legal advice before choosing or changing it; an arrangement suitable for a couple may not suit a parent and adult child.

A will, property title, super death-benefit nomination and enduring appointment perform different jobs. Review them together after a major life event. Inherited property is not automatically tax-free: the ATO’s inherited-property rules determine whether a full or partial exemption applies. The two-year disposal rule has eligibility conditions; it is not a blanket exemption for every estate.

This is general information, not personal financial, tax, credit or legal advice. Aged care arrangements changed on 1 November 2025. Confirm your own fee cohort, current rates and legal position before committing money or signing an agreement.

Protect the helper’s future

Before helping with a deposit, compare the proposed support with your retirement spending, emergency reserves, debts and possible care costs. Stress-test a long retirement, unexpected repairs or a family member being unable to repay. Giving more than you can afford may transfer a problem rather than solve one.

Gifts and loans are different

A gift transfers ownership of money. A genuine loan creates a right to repayment, but calling a payment a “loan” does not guarantee its treatment in a family-law dispute, bankruptcy or means assessment. Get separate legal advice about evidence, enforceability, security and the effect of death or separation.

Document the amount, repayment timing, interest if any, permitted use, default process and whether the balance is repaid to the estate. A proposed mortgage or other security may require lender consent. Ensure all documents tell the same story: a lender’s declaration that money is an unconditional gift can conflict with a private loan agreement.

For Centrelink means testing, gifting free areas are generally $10,000 in one financial year and $30,000 across five financial years, for a single person or couple combined. Amounts above either limit can remain assessable for five years and be deemed to earn income. See Services Australia’s gifting rules. These are assessment limits, not a prohibition on larger gifts. A genuine loan may also remain an assessable asset.

Co-ownership

Buying together can share costs, but also creates ongoing obligations. Agree who occupies the home, pays expenses, arranges maintenance and can require a sale. Consider what happens if one person needs money for care, wants to move, dies or cannot make repayments.

Ownership shares, liability under the loan and actual financial contributions need not be identical. Parents may be liable for more debt than they expect. Their share may also have different CGT or land-tax treatment from a child’s share. Obtain advice about duty, first-home concessions and ownership before signing, rather than assuming the family relationship creates an exemption.

Guarantees

A guarantee can put the guarantor’s own home at risk. Liability depends on the contract and may include interest and costs; it does not necessarily arise only after the borrower’s property has been sold. A guarantee can also affect the guarantor’s ability to borrow.

Read ASIC’s guarantor guidance, get independent advice and ask exactly what is secured, the maximum liability and how release works. Do not assume rising property prices or loan repayments automatically end the guarantee. Family pressure is a reason to pause.

Offsets and ownership of savings

An offset account reduces the loan balance used to calculate interest, subject to the lender’s terms. For a 100% offset, a $500,000 loan with $50,000 in the linked account has interest calculated on $450,000. Fees and the loan’s rate also matter.

Putting a parent’s savings into an account held by a child can create ownership, control, relationship and creditor risks. A declaration or informal family understanding is not universal protection. Do not assume a lender permits an account in someone else’s name to offset the loan. Check the product and obtain legal advice before transferring savings. ASIC explains offset accounts and their costs.

The First Home Super Saver scheme

The FHSS scheme may help eligible first-home buyers save through voluntary super contributions. It is not automatically the best choice for every saver. Ordinary contribution caps still apply, and compulsory employer SG is not an eligible FHSS contribution.

Up to $15,000 of eligible contributions from a financial year, and $50,000 across years, can be taken into account. The releasable contribution portion is generally 85% of eligible concessional contributions and 100% of eligible non-concessional contributions, plus associated earnings calculated under the scheme. It is not an automatic $50,000 withdrawal of pre-tax contributions.

The assessable released amount receives a 30% tax offset; after-tax contribution amounts are treated differently. Request the required determination and check release, contract and occupation deadlines before proceeding. A tax benefit is of little use if the money is unavailable when needed for settlement.

There is no general rule that keeping the home is best or that selling it is necessary. The right comparison depends on the resident’s care needs, preferences, household, finances and applicable fee arrangements.

Confirm the applicable arrangements first

People entering permanent residential care from 1 November 2025 generally face the new contribution arrangements. People already in care before that date generally retain their existing contribution arrangements unless they opt in. Some people approved for or receiving a Home Care Package on or before 12 September 2024 can also retain older care-fee arrangements when entering later.

Importantly, protected care-fee arrangements do not necessarily protect accommodation arrangements. A first entry from 1 November 2025 can attract the new accommodation rules even where older care-fee rules apply. Breaks in care, transfers and opting in require checking. The government’s transition explanation sets out the distinctions.

Get a written assessment and quotation

Arrange a means assessment, obtain the fee advice and ask the provider for its room price, accommodation choices and optional-service terms. A general online estimate is useful for planning but is not a personal determination. Use My Aged Care’s costs guide and discuss your specific position with Services Australia or DVA.

Ask for comparisons covering keeping the home vacant, renting it, selling it and paying accommodation by a deposit, daily payment or combination. Include a partner’s housing needs and enough accessible cash for expenses beyond care.

Reasons to consider retaining it

The home may provide housing for a partner or other household member, preserve a valued connection, generate rent or retain potential capital growth. For aged care means testing, its assessable value may be capped or excluded when a protected person occupies it. None of these features alone settles the decision.

Allow for rates, insurance, maintenance, management, vacancy and selling costs later. Renting can create taxable income and affect benefits and care contributions. Capital growth is uncertain and cannot be used to pay today’s bills without selling or borrowing.

Reasons to consider selling it

A sale may release cash for accommodation, remove property-management demands and reduce dependence on family assistance. It can also change the means assessment and Age Pension position, remove future housing options and trigger tax questions.

Do not compare the home’s gross rent directly with an accommodation interest rate. Rent is earned on the property, while a DAP is calculated from the unpaid agreed accommodation price. They are different amounts. Compare the resident’s total after-tax cash flow, assessable assets, costs, remaining liquidity and risks under each option.

Borrowing is a separate decision

Equity release can reduce cash pressure but compounds debt and reduces equity. A move into care may itself trigger repayment under an existing reverse mortgage. Check terms and obtain independent advice; simply comparing a loan rate with the MPIR is not enough. ASIC’s equity-release guide explains the risks.

The resident’s wishes and decision-making

Needing care does not automatically mean someone lacks decision-making capacity. Involve the person, provide accessible information and support their choices. Family members do not own an anticipated inheritance. The resident’s safety, housing, comfort and preferences must be central.

Enduring appointments differ across states and territories. Check what authority exists, when it operates and whether it covers the proposed decision. A financial attorney cannot assume unrestricted power to make gifts or loans to themselves or relatives. The Victorian Public Advocate’s Take Control guide illustrates the safeguards; use the rules for the relevant jurisdiction.

Protected occupants

For residential aged care means testing, the home can be excluded while occupied by a protected person. This can include a partner or dependent child, a qualifying carer resident for at least two years, or a qualifying close relative resident for at least five years. Carer and relative categories also require eligibility for an income-support payment and other conditions.

Check the actual criteria in Services Australia’s home assessment guide; residence alone does not establish protection. Report changes such as an occupant leaving or becoming ineligible. Relevant personal or financial changes must generally be reported to Services Australia or DVA within 28 days.

Two different means tests

The Age Pension and aged care means tests are not the same. A former home may retain an Age Pension assets-test exemption for up to two years after moving into care, with different treatment where a partner remains. Rent may still count as income. Consult Services Australia’s real-estate rules about your circumstances.

For aged care, the home’s value is generally capped at the indexed amount, or its lower net market value, unless excluded by the protected-person rules. If sold, proceeds and any accommodation deposit have their own treatment. A RAD is generally exempt for the Age Pension assets test but included in aged care means testing. Use the residential means assessment guidance rather than assuming one exemption applies everywhere.

Tax and time horizons

The main-residence absence rule may allow continued CGT main-residence treatment after moving out, generally up to six years of income-producing use, or indefinitely without income-producing use, subject to conditions and other-home choices. It is not automatic protection for every property or resident. Seek tax advice before renting, selling, transferring ownership or relying on an estate exemption.

Care duration is uncertain. Model a shorter stay and a much longer one. Consider which assets can meet ongoing bills without a rushed sale. Averages about other residents do not predict one person’s needs.

Care contributions are not universal

Under the 1 November 2025 arrangements, costs can include the basic daily fee, a means-tested hotelling contribution, a means-tested non-clinical care contribution and optional higher everyday living services. Government funds clinical care. Under older arrangements, a means-tested care fee may apply instead of the new contributions.

Not every homeowner pays every charge or the full accommodation price. The assessment determines eligibility for assistance. Check the Department’s explanation of residential charges. Indexed fees and thresholds change, so use the current official schedule with the assessment rather than a fixed dollar figure from an ebook.

Accommodation: lump sum, daily payment or both

For a resident paying the agreed room price, the lump sum is a Refundable Accommodation Deposit (RAD), and the daily alternative is a Daily Accommodation Payment (DAP). Residents receiving accommodation assistance may instead pay a Refundable Accommodation Contribution (RAC), Daily Accommodation Contribution (DAC), or combination.

A DAP initially uses the unpaid accommodation amount, the applicable Maximum Permissible Interest Rate (MPIR) and 365 days. The applicable MPIR is fixed when the room price is agreed, rather than following every later quarterly change. For residents on the new accommodation arrangements, DAP indexation also applies on 20 March and 20 September. My Aged Care explains accommodation payments and their calculation.

“Refundable” now has an important qualification

For eligible residents on the 1 November 2025 accommodation arrangements, RAD/RAC retention is calculated at 2% a year on the daily deposit balance. The five-year period starts when a refundable deposit is first paid. Retentions are not refunded. Entry, re-entry and opt-in rules matter; people covered by the pre-1 July 2014 accommodation arrangements on 31 October 2025 have a specific retention exemption. Other authorised deductions may also reduce the refund.

For residents on the 1 July 2014 arrangements, a break in residential care of more than 28 consecutive days after 31 October 2025 can trigger the new accommodation rules on re-entry. Approved leave is treated differently. Check the Department’s accommodation transition guide separately from any protection of older care fees.

Paying a deposit reduces the unpaid amount on which daily payments are calculated, but it ties up capital and may involve retention. It is not simply a guaranteed tax-free investment return equal to the MPIR. Compare retention, fees, tax, benefits, accessible cash and the resident’s circumstances before choosing a payment mix.

Caps apply to particular contributions

The new non-clinical care contribution stops when its lifetime dollar cap or cumulative four-year payment limit is reached, whichever comes first. Older means-tested care fees have their own annual and lifetime caps. Prior eligible care contributions may count. Reaching a care-contribution cap does not end accommodation costs or all other fees. Check Services Australia’s cap guidance.

Put the comparison in writing

Ask for a plan showing the initial payment, annual cash shortfall or surplus, remaining liquid reserves and estate position across several scenarios. If relatives lend or contribute money, record ownership, repayment and what happens on death or a move. Independent advice for the resident and family members can identify conflicting interests before they become disputes.

Make the next decision around the person receiving care. Bring the fee advice, provider quotation, property and loan details, income records and legal appointments to an adviser familiar with aged care. A clear comparison can help the family support the resident’s choices without relying on assumptions about the home or an inheritance.