Selling Your Home and Renting in Retirement in Australia (2026)
Selling the family home and moving to a rental in retirement is a path more Australians are considering — particularly as housing equity represents a significant portion of total wealth for many retirees. The decision involves financial, lifestyle, and social security considerations that interact in complex ways.
Why Some Retirees Sell and Rent
Reasons retirees sell the family home:
- Unlock equity tied up in property to supplement retirement income or super
- Downsize to reduce maintenance, council rates, and cost of ownership
- Move to a different location (warmer climate, closer to family, lifestyle change)
- Health or mobility requirements that make the current home unsuitable
The Financial Trade-Off — Owning vs Renting in Retirement
The Homeowner Position
A retiree who owns their home outright has:
- Zero housing cost (excluding council rates, insurance, maintenance — typically $10,000–$20,000/year for a house)
- Home equity preserved as an asset
The primary residence is exempt from the Age Pension assets test — meaning the home’s value does not count against you when Centrelink assesses your pension eligibility.
The Renter Position
A retiree who sells and rents has:
- Cash proceeds invested (in super, bank accounts, term deposits, or other assets)
- Annual rental cost to service (median rents in major Australian cities: $25,000–$50,000/year for a house, lower for units)
- Proceeds from the sale count in the Age Pension assets test (investments and financial assets are assessed)
Age Pension Assets Test Implications
The Australian Government Age Pension has a significant interaction with the decision to sell your home.
Your primary residence is excluded from the assets test — regardless of its value.
When you sell the home, the proceeds become financial assets — and ARE included in the assets test.
Age Pension assets test limits (FY2024–25, approximate):
| Situation | Full pension threshold | Pension cut-off |
|---|---|---|
| Single homeowner | $301,750 | ~$674,000 |
| Couple homeowner | $451,500 | ~$1,012,500 |
| Single non-homeowner | $543,750 | ~$916,000 |
| Couple non-homeowner | $693,500 | ~$1,255,000 |
Non-homeowner thresholds are higher — Centrelink recognises that renters need more assets to fund accommodation.
Example of the pension impact:
- Retiree sells a $1.2M home
- After costs, receives $1.1M in proceeds
- Invests the proceeds
- $1.1M in financial assets is now assessed under the assets test
- At the current taper rate ($3 per fortnight for every $1,000 above the threshold), this may significantly reduce or eliminate Age Pension entitlement
This is not necessarily a reason not to sell — but it is a critical factor to calculate before selling.
The Downsizer Super Contribution
Australians aged 55 or older who sell the family home (held for 10+ years) can make a one-off Downsizer Contribution to super of up to:
- $300,000 per person
- $600,000 per couple
This is outside the normal super contribution caps and does not require you to have any remaining contribution cap space. The contribution does NOT count toward concessional or non-concessional limits.
Key condition: The property sold must be your main residence for at least 10 years and be eligible for the main residence CGT exemption (or would have qualified).
Benefit: Super is taxed at 15% on earnings in accumulation phase, and tax-free on earnings in pension phase — generally more tax-efficient than holding the same funds in a bank account or investment.
Practical Considerations
Rental security in retirement:
Renting in retirement in Australia carries real risk — tenants can be displaced at lease end, and moving at 75 or 80 is significantly more difficult than at 65. Periodic tenancy (rolling month-to-month) provides less security than a fixed-term lease.
Rent inflation:
Rental costs rise over time. A comfortable rent payment today may be stressful in 10 years as rents increase and investment returns fluctuate.
Government rent assistance:
Age Pensioners who rent are eligible for Rent Assistance from Centrelink — a supplementary payment. Current maximum Rent Assistance (FY2024–25) is approximately $186/fortnight for a single renter. This partially offsets rental costs but does not cover them.
Maintenance and responsibility:
Renters are not responsible for structural maintenance — landlords manage this. Retirees in older homes with growing maintenance bills may find renting financially attractive for this reason.
Retirement Villages — A Middle Path
Retirement villages offer a community-based option between owning and renting:
- Entry fee or loan-and-licence arrangements
- Ongoing weekly fees
- Complex financial structures — always get independent legal and financial advice before signing a retirement village contract
Retirement village financial arrangements are regulated by state legislation and can involve deferred management fees of 25–40% of the entry price. The financial structure differs significantly from standard property ownership or renting.
Frequently Asked Questions
If I sell my home and put the proceeds into super, does it still affect the Age Pension?
Yes — assets in super are counted in the Age Pension assets test once you have reached Age Pension age. However, depending on your total assets and circumstances, super may still be advantageous from a tax perspective on investment earnings.
Should I sell my home and use the proceeds to fund retirement?
This depends on the size of your home equity, your super balance, your income needs, your health and longevity expectations, the local rental market, and your lifestyle priorities. There is no universal right answer — the correct answer depends on your specific situation.
Can I sell part of my home’s land to fund retirement without selling the whole property?
In some cases, yes — subdividing and selling a portion of land while retaining the main residence is possible where zoning permits. This preserves your main residence (and Age Pension exemption) while unlocking some equity. This is a complex process requiring town planning advice, survey costs, and potentially subdivision works.
Related Guides
- How to Sell a House in Australia — Step-by-Step Guide
- Main Residence CGT Exemption — Selling Your Home Tax-Free
- Selling Your Home Hub
This article provides general information about property decisions in retirement. Age Pension rules, super contributions, and tax implications are complex and depend on your personal circumstances. Speak with a licensed financial adviser before making major decisions. Find one through MoneySmart.