What Happens to My House If I Go Into a Nursing Home?

When considering aged care, one of the most pressing questions is what happens to the family home once residential care begins. The home is rarely “just another asset”: it can determine cash flow, estate intent, and whether you feel forced into a sale. The key is understanding how the home is treated inside the aged care assessment framework—particularly how it interacts with means testing and the broader set of charges outlined in Aged Care Fees.

In this guide, we’ll explain how the home is assessed, what exemptions commonly apply, and how accommodation funding choices (RAD versus DAP) often become the practical mechanism that determines whether keeping the home is viable. Where relevant, we’ll also point to strategies families use to avoid a rushed sale, including ways to avoid selling the family home to fund care.

Understanding How the Family Home is Assessed in Aged Care

When you move into residential aged care, your costs are shaped by an assessment of income and assets, which is why the family home becomes central so quickly. The important detail is not simply “is the home counted?”, but the conditions that change the outcome – occupancy, protected-person rules, and the way the assessment flows into your contribution under the means-tested care fee and related charges described in Aged Care Fees.

However, there are important exemptions and limits:

• If a protected person (such as a spouse, dependent child, or carer) continues to live in the home, it is generally exempt from the asset assessment.
• Even when counted, the home’s value is capped at a set amount for aged care fee calculations.

If you want the mechanics behind why the home sometimes matters (and sometimes doesn’t), start with Means-Tested Care Fee Explained, then use What Assets Are Exempt from Care Home Fees? to see how exemptions and classifications can change what is actually assessed.

Do I Have to Sell My House to Pay for Aged Care?

A common misconception is that moving into aged care forces you to sell your home. In reality, you have several options—keeping, selling, or renting:

• Keeping the Home

  Keeping the home can make sense if a protected person remains living there or if preserving the property is a core estate objective. The trade-off is that your wider assessment can shift depending on whether the home is exempt or assessable, and whether renting introduces assessable income. If Age Pension impacts are part of the concern, review Do You Lose Your Pension If You Go Into a Nursing Home? alongside means testing to understand what changes once care begins.

• Selling the Home

  Selling the home can create immediate liquidity to fund accommodation (most commonly a RAD (Refundable Accommodation Deposit)) but it should be treated as a strategic decision rather than a default requirement. Before committing, compare the lump-sum approach against paying accommodation as DAP, because the “sell or keep” question is often downstream of the RAD-versus-DAP modelling.

• Renting the Home

  Renting the home can preserve ownership while generating cash flow, but it can also increase assessable income and change pension outcomes. If the decision is being driven by avoiding a sale, treat renting as one option inside a broader plan—start with strategies to avoid selling the family home to fund care, then confirm how your contribution is determined through means testing.

Case Study Example

Margaret, aged 82, moved into residential care. Her husband remained in their Sydney home, meaning the property was exempt from the asset test. With tailored advice, they avoided selling the family home and structured their finances to minimise aged care costs.

How the RAD and DAP Affect Your Home

Accommodation funding is where the home and the fees collide most directly. A RAD is a lump-sum accommodation payment; DAP is the daily-payment alternative; and many people use a blend. The key is that RAD/DAP choice is not isolated—it affects liquidity, whether you feel pushed toward selling the home, and how comfortably you can carry other fees described in Aged Care Fees.

Many families default to selling the home to fund the RAD, but that is often a “liquidity reflex” rather than the best strategy. The decision can alter pension outcomes, reshape the estate, and change what remains available for personal spending. If your goal is to preserve the home where possible, start with How to Avoid Selling the Family Home to Pay for Care and then test your contribution outcome under means testing before you lock in a sale.

If you want the accommodation mechanics explained in full, use Understanding Refundable Accommodation Deposits (RAD) and Understanding Daily Accommodation Payments (DAP) as the two reference points, then come back here to interpret what the choice means for the family home.

Government Assistance and Your Family Home

Navigating government rules is complex, but support is available through services like:

• My Aged Care
• Services Australia

These agencies provide the rules and the assessment process, but they do not integrate the trade-offs into a personal strategy (for example, home retention versus accommodation funding method). If you want the underlying fee logic before you decide, review Aged Care Fees and Means-Tested Care Fee Explained so you can separate “what the rules say” from “what the best sequence of decisions is for your household.”

Strategies to Protect Your Home and Assets

Without careful planning, families can find themselves forced into decisions that could have been avoided. Key strategies include:

• Understanding Gifting Rules: Giving assets to family members might seem like a solution, but Centrelink’s deprivation rules can penalise such actions.
• Establishing Trusts or Life Interests: In some cases, structuring ownership differently can offer protection.
• Reverse Mortgages: While not suitable for everyone, unlocking equity without selling may be an option.

If you want to understand which parts of a balance sheet are commonly excluded (and which “exemptions” are conditional), use What Assets Are Exempt from Care Home Fees? as the companion piece, then apply those classifications back to the home decision and your likely contribution under means testing.

Common Questions About the Family Home and Aged Care

What if my spouse or child still lives in the home?

If a protected person remains in the home, it is generally exempt from aged care asset assessments.

How long is my home exempt from aged care calculations?

The exemption applies as long as a protected person resides there. Once the home is vacant, it may be counted after a grace period.

Can I use a reverse mortgage to fund aged care?

Potentially, but the right question is whether equity release improves liquidity without creating a worse outcome elsewhere (pension impacts, assessable income, or a higher contribution). If you are weighing home equity options specifically to avoid a sale, start with home-retention strategies and then model the effect under the means-tested care fee before committing.

Conclusion

Entering residential care does not automatically mean surrendering the family home, but preserving it usually depends on making the accommodation and assessment decisions in the right order. The home outcome is typically downstream of means testing and whether accommodation is funded via RAD, DAP, or a combination.

Every situation is unique, but the decision-path is consistent: understand the fee categories in Aged Care Fees, model your contribution via means testing, and then choose the least damaging accommodation and property strategy. If you want personalised guidance, Roccaforte provides aged care-specific advice and can help you quantify the trade-offs. Book a free consultation today!