Selling an Australian home to buy overseas: how it affects the Age Pension

Proceeds from selling a principal home can be exempt from the Age Pension assets test for up to 24 months from settlement, provided they are intended to buy, build, rebuild, repair or renovate a new principal home. This applies to homes sold on or after 1 January 2023, according to the Department of Social Services (DSS) Social Security Guide¹.

The exemption can be extended to a maximum of 36 months where the extension criteria are met¹.

The seller continues to be assessed as a homeowner during the exemption period¹.

The exemption ends when the new home is bought, or its building or renovation is complete, or the seller no longer intends to use the proceeds for a new home, whichever happens first¹.

Three conditions must be met for an extension beyond 24 months:

• The seller must have made reasonable attempts to buy, build, rebuild, repair or renovate the new home, supported by documents such as a signed contract of sale, a building contract or an accepted quotation¹
• These attempts must have started within 12 months from the date of sale¹
• The delays must be beyond the seller's control, such as delays in the building industry¹.

All three conditions must be met for the extension to apply¹.

The principal home is generally the home where a person or a couple lives for most of the time each year⁵. Services Australia describes it as the home a person lives in and the first two hectares of land it is on, provided the land is held under a single title³.

For a person who owns more than one home, the principal home is the one where the person spends the most time, or the most expensive home if they spend equal time in each⁵. The other home is assessed as an asset even if the person lives there for part of the year.

A home generally remains exempt from the assets test during a temporary absence of up to 12 months, even if the person expects to be away for longer⁶. This period may be extended if the person is overseas and cannot return because of circumstances beyond their control.

An absence is generally considered temporary unless the person has a definite intention not to return⁶. A home that the person does not intend to return to is counted as an asset, and the person is assessed under the higher non-homeowner assets test limits.

From 20 September 2026, the Age Pension assets test limits for non-homeowners are $267,000 higher than the corresponding homeowner limits⁷. A single homeowner can have assets of up to $333,000 for a full Age Pension, compared with $600,000 for a single non-homeowner.

The published guidance from the Department of Social Services (DSS) and Services Australia does not confirm whether the Age Pension sale proceeds exemption applies when a person buys a home overseas¹.

The DSS definition of a principal home does not specify that the home must be in Australia. However, this does not establish whether a home bought overseas qualifies for the exemption⁵.

If the exemption does not apply, sale proceeds held in a bank account or other financial asset are included in the assets test and assessed using the standard deeming rates³.

A seller who does not intend to use the proceeds to buy a new principal home is assessed as a non-homeowner¹³.

Written enquiries about the Age Pension and a move outside Australia can be sent to Centrelink International Services by post to PO Box 7809, Canberra BC ACT 2610, or by fax on +61 2 6124 8813¹⁴. The service can also be called on 131 673 from within Australia, and it lists country-specific numbers for callers outside Australia¹⁵.

Services Australia requires Age Pension recipients to report the sale of a home within 14 days².

Services Australia can be asked to explain a decision about Centrelink payments, and a decision can be formally reviewed¹⁶.

How the published rules apply to six common questions about buying a home overseas:

A seller who is a foreign resident for tax purposes when the sale contract is signed cannot claim the capital gains tax (CGT) main residence exemption on an Australian home sold under a contract signed after 30 June 2020, according to the ATO²⁰.

The exemption is unavailable even if the seller was an Australian resident for part of the time the home was owned. A partial exemption for those years is also unavailable under this rule²⁰.

For a sale under a contract, the ATO uses the date the contract is signed, rather than the settlement date, to determine when the property is sold for CGT purposes.²⁰ The seller's tax residency on that date therefore affects eligibility for the main residence exemption. The Age Pension sale proceeds exemption uses a different date and begins at settlement¹.

An Australian resident's home is generally exempt from CGT where it has been the home for the whole ownership period, has not been used to produce income and is on land of two hectares or less²¹.

A foreign resident can claim the exemption under the life events test where both conditions are met:

• the seller was a foreign resident for tax purposes for a continuous period of six years or less²⁰
• during that period, the seller, their spouse or their child under 18 had a terminal medical condition, the spouse or child under 18 died, or the sale followed a formal agreement after a marriage or relationship breakdown²⁰.

When a person ceases to be an Australian resident for tax purposes, certain assets are treated as though they have been sold at market value. However, this generally does not apply to Australian real estate²².

Leaving Australia does not trigger a CGT event for a home in Australia, because the home is taxable Australian property²³. A CGT event happens when the home is sold²²²³. The full 50% CGT discount is not available on an asset acquired after 8 May 2012 and sold after the owner became a foreign resident, though a partial discount may apply²².