The Full Market Value Counts, and So Does the Rent
An investment property is assessed under both Age Pension means tests and under neither of them is it deemed. The assets test counts its market value less any debt secured against it; the income test counts the actual net rent. For a property with a low yield relative to its value, that combination produces a large assets figure and a small income one.
- The answer: The property is assessed at market value less any loan secured against it, and the net rent after deductible expenses is assessed as income.
- The trap: Only debt secured against the property reduces its assessed value. A loan against your home used to buy the property does not.
- The recommendation: Get the valuation right and update it. Services Australia uses your figure until it has a reason not to, and an overstated value costs pension every fortnight.
Where the AI summary above gets this wrong
"Investment properties are deemed for the Age Pension like other investments."
That's surface-true. Here's what it misses:
- Property is not deemed — Deeming applies to financial assets. A property is assessed at market value under the assets test and on its actual net rent under the income test.
- Only secured debt reduces the assessed value — A loan against your home used to fund the purchase does not reduce the property's assessed value, even though the money bought it.
01 How each test treats it
Under the assets test, the property is counted at its current market value less any debt secured against that property. Where a loan is secured against more than one property, it is apportioned.
Under the income test, the assessed amount is the net rent — gross rent less the expenses allowed, which broadly follow the tax deductions but not exactly. Depreciation and capital works deductions are not allowed as expenses for this purpose.
That difference matters: a property that is negatively geared for tax because of depreciation can still be assessed as producing positive income for Centrelink, which surprises owners who expect the two figures to match.
Source: Services Australia — Asset types
02 Why the debt security matters
Only a loan secured against the investment property reduces its assessed value. A household that used equity in their home to fund a deposit has a debt that is secured against the exempt home and does not reduce the assessable asset.
That produces a poor outcome: the home is exempt anyway, so the debt against it achieves nothing for the assets test, while the investment property is assessed at its full value.
Restructuring the security is possible and is a lending decision with its own costs. It also interacts with deductibility, since deductibility follows the use of the funds rather than the security — the point made in the loan priority post.
03 What it costs in pension
At the assets test taper, every $100,000 of net assessed property value costs $7,800 a year of Age Pension. A $700,000 property with a $200,000 secured loan is $500,000 assessed, which is $39,000 a year of pension.
Against that, the property produces net rent that is also assessed. Where the yield is low, the household is losing more pension than the property produces in income, which is the arithmetic that drives most sale decisions at this stage.
The worked example puts both tests against your own figures. Whether to sell, and when, is a separate decision covered in the sale timing post.
Shows: the Age Pension lost to the assets test on a property's assessed value, against the net rent it produces. Ignores: the income test reduction from that rent, the maximum payment rate that caps the reduction, and the assets test threshold, which is assumed already exceeded.
The security on the loan is the detail that costs people the most and gets the least attention. Borrowing against the home to buy an investment property is common, convenient, and means the debt reduces the value of an asset that was exempt anyway while the assessable one is counted in full. It is worth checking which property your loan is actually secured against.
FAQ
How does owning multiple investment properties affect my Age Pension assets test?
Each is assessed at market value less any debt secured against that property, and the net rent from each is assessed as actual income. Property is not deemed.
Does my investment loan reduce the assessed value?
Only where it is secured against that property. A loan secured against your home, even if the money bought the investment, does not reduce the investment property's assessed value.
Are depreciation deductions allowed against rental income for Centrelink?
No. The net rent assessed for the income test broadly follows the tax deductions but excludes depreciation and capital works, so a property that is negatively geared for tax can be assessed as producing income.
Sources
Regulator references
- Services Australia — Asset types · Services Australia · 2026Which assets are counted in the assets test, including real estate, and which are exempt.Last verified: 2026-09-07
- Services Australia — Assets test for Age Pension · Services Australia · 2026The assets test: which assets count, the thresholds, and the taper that reduces the payment.Last verified: 2026-09-07
Calculator unit tests · the assertions this page's worked example is checked against, and their last result
Changelog
- 2026-09-07 — initial publish (new format)
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Jordan Reeves
Founder of Talk Through Wealth. A software engineer for over a decade before turning to retirement planning, Jordan built the projection engine after watching family members get fragmented, country-by-country advice that never reconciled. He writes about retirement the way the engine computes it: month-by-month, lifetime-long, and skeptical of any rule of thumb that hasn't been run through the math.