Two homes, one relationship. It sounds like a luxury arrangement, but for older Australians entering new partnerships after divorce or bereavement, maintaining separate residences has become a deliberate wealth-protection strategy. The question investors and advisers are asking: does the living apart together property model deliver the financial benefits couples expect, or does it create hidden costs that cancel out the upside?
The mechanics are straightforward. Each partner keeps their own home, their own mortgage (if any), and their own title. They spend time together but maintain separate legal residences. No shared equity, no blended household, no joint ownership complications.
Who’s choosing this and why it appeals
The driver is usually estate planning, not lifestyle preference. Older Australians entering second or third relationships often have adult children from previous marriages, existing property portfolios, and a strong preference to keep inheritance pathways clear. A shared home muddies that, death triggers probate, family provision claims, and disputes over who gets what.
Separate homes sidestep the problem. Each property passes directly to that partner’s nominated beneficiaries. No court fights, no shared asset to divide, no lawyers arguing over what share the surviving partner deserves versus what the deceased’s children inherit.
The age pension adds another layer. Centrelink treats a couple living together as a single economic unit, applying the combined assets test and income test. For couples where one or both partners sit near the pension threshold, maintaining separate principal residences can keep both properties exempt from the assets test, potentially preserving part-pension eligibility that would disappear under shared ownership.
The catch
- Centrelink’s relationship test doesn’t care about your title deeds. If you’re a couple in all but address, they’ll assess you as a couple regardless of how many properties you own separately.
- Running two households costs more than one. Rates, insurance, utilities, maintenance, doubling those fixed costs eats into any pension or tax benefit you’re trying to protect.
- Capital gains tax still applies to any property that isn’t your main residence. If one partner keeps a second home and claims the relationship home as their PPOR, selling the second property later triggers CGT on gains since it stopped being the main residence.
- Estate disputes don’t vanish just because you never shared a lease. Family provision claims can still target assets if a surviving partner can demonstrate financial dependence, regardless of whose name was on the title.
The pension reality: two homes don’t guarantee two exemptions
Centrelink’s principal place of residence exemption applies to one home per person, but only if that home is genuinely your principal residence. The test is factual: where do you actually live most of the time?
If both partners maintain separate homes but spend the majority of nights together at one address, Centrelink can deem the second property an investment, pulling it into the assets test. The threshold for a couple in 2025 is $451,500 (homeowner) or $693,500 (non-homeowner). A $600,000 second property, once included, can tip you out of part-pension eligibility entirely.
The income test applies too. If one partner rents out their “separate” home while spending most nights at the other’s place, that rental income gets assessed under the couple rate, not the single rate, cutting the pension further.
Tax treatment: no automatic win
Land tax varies by state, but most jurisdictions offer a principal place of residence exemption. If you’re claiming two separate PPORs in the same state, expect scrutiny. Victoria and NSW both apply factual tests, the property you occupy as your home gets the exemption, the one you don’t occupy gets taxed.
If the second home is genuinely unoccupied (one partner keeps it “just in case”), land tax applies in most states once the total landholding exceeds the threshold. In NSW that’s $1,075,000 for 2025; in Victoria it’s $50,000 for general land tax or $300,000 if you qualify for the absentee owner surcharge exemption.
Capital gains tax becomes an issue on sale. If one partner sells their separate home after years of claiming the other partner’s address as their main residence, the ATO will ask: when did this property stop being your PPOR? The gain from that date forward is assessable. The 50 per cent CGT discount still applies if you’ve held the property more than 12 months, but the tax bill can surprise couples who assumed two homes meant two full exemptions.
Estate planning: cleaner than joint ownership, not foolproof
The estate advantage is real but not absolute. Separate ownership means each partner’s will governs their own property, no automatic right of survivorship, no dependence on the other partner’s estate decisions.
But family provision legislation in every state allows eligible dependents (including de facto partners) to challenge a will if they can show they weren’t adequately provided for. A surviving partner who can demonstrate financial reliance on the deceased, even without shared property title, can claim against the estate. The threshold is need, not ownership.
Binding death benefit nominations on superannuation offer a partial workaround: super passes outside the estate if the nomination is valid and current. But super balances often aren’t large enough to offset a property inheritance dispute, especially for older Australians who’ve already drawn down their balances in retirement.
What would change the calculus
The living apart together property model works cleanest when:
- Both partners are financially independent, with similar asset bases and income.
- Neither relies on the other for housing or living costs.
- Both have clear, uncontested wills and adult children who accept the arrangement.
- The cost of running two households is materially lower than the pension or estate-planning benefit.
It breaks down when:
- One partner is significantly wealthier or older, creating financial dependence.
- Adult children from previous relationships are hostile to the new partner.
- The fixed cost of two homes erodes retirement cashflow faster than anticipated.
- Centrelink applies the relationship test and treats you as a couple anyway, eliminating the pension upside.
Scenarios to stress-test before committing
Base case: both partners maintain genuinely separate residences, spend roughly equal time at each address, and Centrelink accepts the arrangement. Pension eligibility survives, estate distribution is straightforward, CGT applies only if one property is later sold.
Downside: Centrelink deems you a couple, applies the combined assets test, and one or both partners lose part-pension. The cost of running two homes exceeds the pension you were trying to protect. On death, a family provision claim forces the estate to sell one property to satisfy the surviving partner’s dependency claim.
Upside: both properties appreciate over the next decade, each partner’s estate passes cleanly to their intended beneficiaries, and the pension benefit (if any) offsets the extra holding costs. No disputes, no CGT on sale (if both homes remain PPORs until death), no land tax (if under thresholds or genuinely occupied).
Decision checklist: is this worth the complexity?
Run the numbers on fixed costs. Rates, insurance, utilities, maintenance for two homes versus one shared residence. If the annual difference is $15,000–$25,000 and neither of you qualifies for a pension, the strategy is purely estate-driven, make sure the inheritance clarity justifies the cashflow hit.
Get Centrelink advice in writing. Submit a relationship details form early. If they assess you as a couple despite separate addresses, the pension benefit vanishes and you’re left holding two properties at double the cost.
Stress-test the estate plan with a lawyer who specialises in family provision claims. A will that leaves everything to your children and nothing to your partner will get challenged if your partner can show financial dependence. Structure super, property and other assets to minimise that risk.
Consider a binding financial agreement (the relationship equivalent of a prenup). It won’t stop a family provision claim, but it clarifies what each partner expects and can reduce disputes after death.
Start here
If you’re in a new relationship and want to protect existing property or inheritance pathways, model the full cost of two homes (not just the mortgage, the whole carrying cost) against the pension or estate benefit you’re trying to preserve. Then test whether Centrelink will actually treat you as separate or deem you a couple. The living apart together property strategy can work, but only if the numbers support it and the relationship test doesn’t override your structure. Subscribe to the newsletter for updates on pension rules, estate planning and property tax treatment.
General info, not financial advice.
