Do you have to sell your home to pay for aged care? Not necessarily.
Understanding Your Residential Care Options
Moving into residential aged care can be an emotional and financial transition for an individual and their family. Understanding the available care options and how accommodation can be funded can make the process less stressful.
The Australian aged care system has changed significantly since November 2025. Today, support can range from assistance that helps an older person remain at home through to permanent residential care.
Planning ahead can also help you understand how aged care could affect your home, investments, superannuation, Age Pension and the financial security of a partner who remains at home.
When might Aged Care become necessary?
Illness, disability, frailty or simply the effects of ageing can make everyday tasks more difficult.
For many people, the first preference is to remain living independently at home. With appropriate support, this can remain possible even when some assistance becomes necessary.
However, there may come a time when managing safely at home is no longer practical. Increasing care needs, difficulties with mobility, medication management, personal care or everyday household tasks may indicate that additional support is required.
The important point is that aged care planning does not necessarily mean moving into residential care.
The current system provides a range of support options designed to help eligible older people remain independent at home where appropriate.
Start with an aged care assessment
If you or a loved one needs aged care, the first step is generally to contact My Aged Care and request an assessment.
The former Aged Care Assessment Team (ACAT) system has been replaced by the Single Assessment System. A single assessment pathway now considers an older person’s care needs and the types of government-funded services for which they may be eligible.
An assessment considers areas such as your ability to manage everyday activities, your health and care needs, and the support you may require.
If you are eligible for government-funded care, the assessment helps determine the services and level of support that may be appropriate.
It is worth starting this process before a crisis develops. Having an assessment and understanding your options can make future decisions easier if your circumstances change.
Support at home
The Support at Home program commenced on 1 November 2025. It replaced the former Home Care Packages Program and Short-Term Restorative Care Programme.
Its purpose is to help eligible older people remain living safely and independently at home for longer.
Support can be tailored to individual needs and may include:
- Personal care and daily activities
- Domestic assistance
- Meal preparation
- Transport and social support
- Nursing and other clinical services
- Allied health services
- Assistive technology
- Home modifications
- Restorative care
- End-of-life support.
The amount of government funding and the services available depend on the person’s assessed needs.
Participants may need to contribute towards some services. Contributions depend on financial circumstances and the type of service received. The Government covers the full cost of clinical support services, while contributions can apply to some everyday living and independence services.
The cost of receiving care at home can therefore vary considerably between individuals.
When residential aged care may be appropriate
Sometimes a person’s care needs become too complex or intensive to manage safely at home.
Residential aged care provides accommodation and ongoing care in an aged care home. It may be appropriate where someone needs regular assistance with personal care, mobility, medication or other daily activities.
Residential aged care can provide:
- Accommodation and meals
- Cleaning and laundry
- Personal care
- Assistance with mobility and daily activities
- Social and lifestyle activities
- Access to nursing and health services
- Assistance with medication and health appointments.
Choosing residential care is an important decision. Care needs, location, quality, available services, accommodation and cost can all influence the choice of facility.
It is therefore worth investigating suitable homes before a move becomes urgent.
Understanding residential aged care costs
Residential aged care costs can appear complicated because several different fees and contributions may apply.
The arrangements that apply can depend on when a person entered care and their individual circumstances. People entering residential care from 1 November 2025 generally fall under the newer arrangements, although transitional and “no worse off” provisions mean that not everyone is treated in exactly the same way.
For people covered by the newer arrangements, costs may include:
Basic daily fee – a contribution towards everyday living expenses such as meals, cleaning and laundry.
Hotelling contribution – some residents contribute towards everyday living services, depending on their financial circumstances.
Non-clinical care contribution – some residents may contribute towards non-clinical care, including assistance with personal activities, mobility and lifestyle activities.
Accommodation costs – residents may need to contribute towards the cost of their accommodation. The amount depends on the agreed room price and the person’s financial circumstances.
Higher Everyday Living Fee – some aged care homes offer additional services or a higher standard of everyday living for an optional fee.
Not everyone pays every type of fee, and the amount can vary significantly.
Because aged care fees, thresholds and interest rates are subject to change, current rates should always be checked when care is being considered. (The above link to the My Aged Care website is the first port of call in this regard.)
Do You Have to Sell Your Home to Pay for Aged Care?
No, entering residential aged care does not necessarily mean you have to sell your family home.
The prospect of selling a home where you or your family may have lived for many years can add considerably to the emotional stress of moving into residential care. However, there can be alternatives to selling the property to fund accommodation.
Depending on your circumstances, residential accommodation can generally be funded through a Refundable Accommodation Deposit (RAD), a Daily Accommodation Payment (DAP), or a combination of the two.
A DAP works broadly like a daily accommodation payment rather than requiring the entire accommodation amount to be paid upfront. This can potentially allow a person to retain their home rather than selling it simply to fund a lump-sum accommodation payment.
There may be other reasons for retaining the family home. A spouse or partner may continue living there, the property could potentially generate rental income, or the family may have estate-planning reasons for retaining it.
However, keeping the home is not necessarily the best financial outcome in every situation. Retaining, renting or selling the property can affect cash flow, Age Pension entitlements, aged care costs, taxation and estate planning.
The decision should therefore be considered as part of the family’s overall financial position rather than based solely on the immediate cost of residential accommodation.
Keeping or selling the family home
There can be valid reasons for retaining the family home.
A spouse or partner may continue living there. The property may provide rental income if it is leased. The family may want to retain it for estate-planning purposes. There may also be a possibility, however uncertain, that the person entering care could eventually return home.
On the other hand, selling the property may release capital that can be used to fund accommodation and other expenses.
Neither approach is automatically appropriate.
Keeping, renting or selling the home can have consequences for:
- Age Pension entitlements
- Aged care fees and contributions
- Income tax
- Capital gains tax
- Investment income
- Cash flow
- Estate planning
- The financial security of a spouse remaining at home.
The interaction between these factors can be particularly important for couples.
Paying for an accommodation lump sum
A RAD can provide a way of paying some or all of the agreed accommodation price upfront.
A significant advantage is that the remaining refundable balance is generally returned when the resident permanently leaves care, subject to applicable deductions and retention arrangements.
A RAD can also be paid in part, with the remaining accommodation cost met through a DAP.
However, there are important financial considerations. Under the current arrangements, a refundable lump sum is counted as an asset for aged care means assessment purposes, although it is exempt from the Age Pension means test.
This illustrates why the choice between a RAD, DAP or combination should not be made simply by comparing the amount of cash available.
The opportunity cost of using investment capital, the income generated by retained assets, pension entitlements, aged care contributions and the needs of the remaining partner should all be considered.
Consider the impact on both partners
When one member of a couple enters residential aged care, it is important to consider the financial position of both people, rather than looking only at the costs faced by the person entering care.
For example, selling the family home may provide capital to meet an accommodation payment. However, the proceeds may also affect the couple’s assessable assets and, consequently, their Age Pension or aged care contributions.
Similarly, retaining the home and renting it may provide income to help meet daily accommodation payments, but rental income can also affect means assessments.
The decision about whether to sell the home and whether to pay a RAD or DAP can therefore affect the financial position and aged care costs of both members of a couple.
This is why the decision should be considered as part of the couple’s overall financial strategy.
Planning ahead can make a difference
Aged care decisions are often made at a difficult time.
A sudden illness, fall or deterioration in health can leave families needing to make important decisions quickly. Planning ahead provides more time to investigate care options, compare providers and understand potential costs.
It also gives you an opportunity to consider questions such as:
- Where would I prefer to receive care?
- Could I remain at home with additional support?
- What would residential care cost?
- Should we retain or sell the family home?
- How could accommodation be funded?
- What happens to our investments and superannuation?
- Can my partner remain financially secure if I enter care?
- Would our estate planning need to change?
- Do we have sufficient cash reserves for unexpected care costs?
These questions become particularly important for couples, where one person may require significant care while the other continues living independently.
It is never too early to understand your options
Aged care is no longer simply a choice between staying at home or moving into a residential facility.
Today’s system provides a range of support options, from assistance with everyday activities at home through to permanent residential care.
The rules governing aged care changed significantly from November 2025. Understanding the current system, your eligibility and the potential costs can help you and your family make better-informed decisions when care becomes necessary.
Financial planning can form an important part of that preparation.
By considering your assets, income, superannuation, pension entitlements, accommodation choices and the needs of your partner, you can develop a strategy that provides greater financial confidence when care becomes necessary.
Planning ahead cannot remove every uncertainty associated with ageing. It can, however, give you and your family more choices when those decisions need to be made.
Continuum Financial Planners role in Aged Care decision-making
Our experienced financial advisers include specialist aged care advice training and skills: our specialist is available to help you identify the effects and consequences of either selling your home to fund residential aged care or taking some other course to achieve that goal.
To arrange an appointment with them –
- Phone our office on 07-34213456, or
- At your convenience, use the linked Book A Meeting
(This article was first posted by us in September 2026.)