Kim Macdonald: State and Federal governments gang up on downsizing pensioners

If there were a citizenship award in life — as in primary school — it would go to Sam.

Aged in his 70s, Sam (not his real name) did not take any sick days in his working life, diligently turning up to his office job for 45 years.

At one stage he worked two jobs to get ahead and pay off the mortgage on his big four-by-two family home.

Fast forward to his retirement and instead of being rewarded, the pensioner was punished by the Federal Government’s Centrelink for the money he made by — literally — selling the family china at swap meets.

And he was only selling his personal possessions to save up for a State Government tax that would be dumped on him for downsizing.

Honestly, what a golden age to be alive. (Please read that line in a sarcastic tone with a hint of existential dread.)

The full details of this story lay bare a State and Federal system that is treating seniors with contempt.

Sam explains the main reason he and his wife sold their possessions was to afford to move house.

Not only do the pair want something smaller and more manageable for their senior years, but they are conscious many younger people need a family sized home amid WA’s chronic housing crisis.

He said there is not much difference between the sale price of his big old home and that of a unit or apartment, given the smaller place would have to be new enough to ensure they are not lumbered with big maintenance costs over the next couple of decades.

In fact, Sam figured out that after he forks out for moving costs and real estate agent’s fees, as well as contributing to the State Government’s favourite cash cow — stamp duty — the property transaction would leave the pair only $60,000 ahead.

With strata fees at a unit or apartment costing between $2000 and $10,000 a year, he questioned whether the windfall would last as long as the pair.

So like many of their friends, they started selling their possessions.

Trailers, furniture and the good family china have been sold at garage sales, online platforms and at swap meets, to pull together funds required for the downsizing move.

But they stopped after Centrelink, also known as Services Australia, docked their pension over their swap-meet income.

Services Australia confirmed that regular earnings from the sale of personal items at places like swap meet can affect the pension. It confirmed that 50¢ in the dollar could be docked from a payment for any income worth more than $218 per fortnight.

The extra income can be detected through random checks or if the pensioner declares it.

The full pension is restored the following fortnight regardless of the value of the swap-meet income, unless there is a new swap-meet payment. But Sam — like me — thinks the system is ridiculous.

“You would think Centrelink should spend their time tracking down those who swindle them, but oh no, they go for the oldies,” he lamented.

The Federal Government’s actions are even worse when you consider the meagre size of the couple’s pension, which is worth $215 a week each, including the basic rate as well as supplements.

The State Government is just as shameful in its treatment of seniors. In WA, unlike some other States and Territories, there are no incentives to downsize. Instead, downsizing pensioners, like any other buyer, must pay stamp duty.

To give an indication of the value, stamp duty is charged at about $35,000 on an $850,000 home.

The Real Estate Institute of WA is calling for a $10,000 stamp duty concession for downsizers, citing a recent survey that showed the tax deterred seniors from selling their big family homes.

The survey showed that 63 per cent of respondents claimed stamp duty was a significant barrier to downsizing and 71 per cent supported a concession for downsizers.

The reluctance of seniors to pay this tax leads them to choose the alternative — which is remaining in their family home.

And the low sales stock has consequences for the rest of the market, forcing young families to burst at the seams of their units and townhouses.

Sam has abandoned his plans to downsize thanks to the State and Federal government policies.

And the housing crisis continues.