Avoiding rest home fees in New Zealand

• How the Residential Care Subsidy works
• Current asset thresholds (2025)
• Whether you avoid rest home fees by gifting assets
• Strategies that do not work
• Options for those who don’t qualify for the subsidy

To get help paying rest home fees through the Residential Care Subsidy, you must first have a Needs Assessment confirming you require long-term care, and then meet the required financial thresholds. 

Work and Income assess: 

• Your assets
• Your income 
• Your partner’s situation (if you have one) 

If your assets or income are over the threshold, you must pay the full cost of your care until your assets drop below the limit. 

The asset test is the government’s way of checking how much you own and still have them pay for your care. If you are over these limits, you must pay for your care yourself until your assets fall below the threshold. 

If you are aged 50-64 and single with no dependent children, you automatically pass the asset test. 

If you are 65 or older, the main limit for your total assets is $291,825. This limit applies if: 

• You are single
• You have a partner and your partner is also in long-term care. This limit covers your combined assets. 

If you are 65 or older and your partner remains living in your family home, the government gives you a choice on how to count your assets.

No, you cannot fully avoid rest home fees by large-scale gifting of assets right before you apply to the Residential Care Subsidy. 

The New Zealand system has “anti-deprivation” rules that limit how much you can legally give away. Any amount gifted over these limits is counted back as if you still own it. If the total (your remaining asset plus excess gifting) exceeds the subsidy threshold, you must pay for your own care. 

The maximum amount you can gift without penalty depends on the timeline: 

• Gifts made more than 5 years ago: You and your partner can gift up to $27,000 per year (combined) without it counting against your assets. 
• Gifts made in the last 5 years: The limit drops sharply to $8,000 per year (combined). The total allowed over the five years is $40,000 (or $80,000 if both partners apply together).

The government also checks that any assets sold in the last five years we sold for “fair value.” If you sell something for less than market price the difference may be treated as a gift and subject to the low limits above. 

Due to the complexity and severe financial risks, always seek professional legal advice before structuring your assets to get the subsidy.

1 . Keeping the home when one partner lives in it.

Work and Income clearly states that the family home is excluded from asset testing if a partner continues to live there. 

2. Prepaying funeral expenses 

Recognised prepaid funeral plans up to the allowed limit (generally around $10,000) are exempt. 

3. Spending money towards your own needs

Reasonable spending that benefits you, like medical costs, home maintenance, mobility equipment, travel or accessibility improvements, is not considered deprivation.

4. Planning early

Because gifting rules are strict, the only safe way to use them is to plan years, not months, ahead. 

According to MSD’s official guidance on deprivation: 

• Giving up your house shortly before entering care
• Large lump-sum gifts outside allowable gift limits 
• Selling assets to family for less than market value
• Transferring assets to a trust too late
• Reducing income artificially 

MSD can assess these as “intentionally depriving yourself of assets”.

You’ll pay the standard fee (the Maximum Contribution) until your assets fall under the threshold. You’re allowed to reapply at any time. 

You may be able to get a Residential Care Loan, which is an interest-free loan available through Work and Income if you do not qualify for the Residential Care Subsidy and own a property. It is paid directly to your care provider to help avoid selling your home immediately, as it is only repaid after you pass away or sell the property.