How to Pay for Aged Care Without Selling the Family Home

Imagine this: your loved one needs aged care, but the thought of selling the family home—the place filled with decades of memories—feels like losing a piece of your history. You're not alone. Thousands of Aussies face this dilemma every year, but the good news is there are proven strategies to cover aged care costs without handing over the keys to your home.

In this guide, we'll walk you through practical ways to fund residential aged care or in-home support while keeping your property intact. With 2026 reforms in full swing, understanding means testing, government subsidies, and smart financial moves is key to protecting your assets.

Understanding Aged Care Costs in Australia in 2026

Aged care isn't cheap, but the government covers a big chunk through subsidies. Costs break down into daily fees, care contributions, and accommodation—yet your family home often doesn't count as an assessable asset if your partner still lives there.

Key Fees and Charges Under the Latest Reforms

Since the November 2025 reforms, fees are clearer but higher in some areas. Here's what you'll pay:

• Basic Daily Fee: Everyone pays this—$65.55 per day ($23,925.75 yearly), covering meals, laundry, and utilities. It's 85% of the single Age Pension rate, indexed twice yearly.
• Means-Tested Care Fee: Up to $403.80 daily, but capped at $35,238.11 annually or $84,571.66 lifetime. Services Australia calculates this based on your income and assets.
• Hotelling Contribution: Up to $22.15 daily for everyday living extras like cleaning.
• Non-Clinical Care Contribution: Up to $105.30 daily, with a lifetime cap of $135,318.69 or four years.
• Accommodation Costs: Refundable Accommodation Deposit (RAD) averages $470,000, or Daily Accommodation Payment (DAP). Providers can charge up to $758,627 without approval.

If your income is under $34,762 and assets below $63,000 (updated to March 2026), the government pays your full accommodation.

Why the Family Home Often Isn't Counted

The family home is a lifeline in means testing. Services Australia excludes it from your assessable assets if:

• Your partner, spouse, or dependent child lives there.
• It's your principal residence and you're in hospital or respite temporarily.
• You're absent for up to two years (or five for couples).

This exemption lets you keep the home while receiving subsidies. For example, if you're single and enter care, the home becomes assessable after two years unless rented out—but many families avoid this by gifting or restructuring early.

Proven Strategies to Pay for Aged Care Without Selling

Here are actionable steps tailored for Aussies. Start planning early—Centrelink rules have look-back periods for gifting.

1. Leverage Government Subsidies and Means Testing

Apply via My Aged Care for a free assessment. If eligible, full subsidies kick in for low-means folks. Even with higher assets, you'll pay only a portion—government covers clinical care fully.

Tip: Use Services Australia's payment estimator tool to model your fees before committing.

2. Opt for Refundable Accommodation Deposits (RADs) or DAPs

Instead of selling, pay the RAD from savings, super, or loans—it's fully refundable on exit (minus 2% annual retention for five years max).

Or choose DAPs, indexed to CPI, spreading costs daily. Combine both for flexibility. No need to touch the home equity.

3. Use Home Equity Through Reverse Mortgages or Loans

Products like reverse mortgages let over-60s access home equity without monthly repayments—interest rolls up, repaid on sale or death. Lenders like ATO-approved providers ensure compliance.

Equity release loans or lines of credit work too. Compare via Moneysmart to avoid pitfalls like reduced Age Pension.

4. Gift Assets Strategically (But Mind the Rules)

You can gift up to $10,000 per year ($30,000 over five years) without affecting means testing—excess triggers a five-year deprivation period.

Transfer the home to family via family agreement, but get legal advice. Use granny flats or right-of-residence arrangements to formalise support.

5. Tap Superannuation and Downsizer Contributions

Super remains assessable but can fund RADs tax-free after 60. The $300,000 downsizer super contribution (over 60, from home sale) isn't needed here—but if downsizing elsewhere, it boosts retirement savings.

6. Consider In-Home Care First (Support at Home Program)

Delay residential care with the new Support at Home program (from Nov 2025). Funding levels 1-8 range $2,674-$19,427 quarterly for services like cleaning or nursing—no home sale required.

Budgets roll over up to 10%, giving flexibility. Ideal for keeping independence longer.

7. Family Loans or Agreements

Formalise intra-family loans for RADs, registered with Centrelink as income (not assets). Granny flat rights let family 'buy' home space for care funding—exempt from gifting rules.

Common Pitfalls and How to Avoid Them

• Deprivation Provisions: Don't dump assets last-minute—five-year look-back applies.
• Indexation: Fees rise March/September—budget accordingly.
• Partner Impact: Ensure your spouse's pension isn't affected; they can stay in the home.
• Legal Fees: Consult elder law specialists via Law Council.

Next Steps to Protect Your Home and Dignity

Don't wait for a crisis. Book a My Aged Care assessment today, crunch numbers with Services Australia, and chat with a financial adviser specialising in aged care. Tools like the Aged Care Financial Planning Kit from moneysmart.gov.au make it straightforward.

By acting now, you can secure quality care without sacrificing your legacy. Your family home stays yours—full of stories, not regrets.