Should the family home be included in the age pension calculation?

July 29, 2026 — 5:01am

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I recently read a report by the Policy Institute Australia titled Home Truths: Rebalancing to Better Means Testing. One of its recommendations is to include at least part of the family home in the assets test for the age pension. It made me wonder: if the family home is no longer sacrosanct for the pension, could capital gains tax on the family home be next? I suspect I’m not alone in finding this deeply unsettling. Many Australians have worked hard, paid tax all their lives, and sacrificed to own their home outright, believing it would provide security in retirement. Now it seems even that security is being questioned.

The report argues this is about “intergenerational equity”, but many older Australians will see it differently. They will feel that the goalposts are once again being shifted after decades of playing by the rules. Is this something retirees should genuinely be worried about, or is it simply another policy idea that is unlikely ever to become law?

This is a proposal that surfaces occasionally, but politics is the art of the possible. While think tanks are free to recommend bold reforms, governments have to persuade voters. I struggle to see any government winning support for including the family home in the age pension assets test.

The report proposes exempting the first $500,000 of the family home’s value and counting the balance under the assets test. On paper that may sound reasonable, but the practical consequences would be enormous.

The age pension cuts out completely for a homeowner couple with assessable assets of around $1.1 million. With Sydney’s median house price now around........

© The Sydney Morning Herald