Key takeaways
- If your partner still lives in the family home, the home and car do not have to be counted. You can choose an asset test of $164,731 that leaves them out entirely, so going into care does not put your partner’s house at risk.
- From 1 July 2026 the asset limit is $300,811 for a single person or a couple who are both in care. These limits rose on 1 July 2026, so guides published earlier this year may still show the old numbers.
- If you are single and the house pushes you over the limit, the interest-free Residential Care Loan means you do not have to sell in a hurry.
- Nobody pays more than the regional maximum contribution for standard care, between $1,513.33 and $1,634.43 a week from 1 July 2026, even with no subsidy at all.
- The gifting allowances are per couple, not per person. $8,500 a year in the five years before applying with a $42,500 cap, and $27,000 a year before that. Gifts over the limits get counted back in, including gifts into a family trust.
- A family trust does not automatically protect assets. MSD can look through trusts and count deprived assets and income, and late restructuring usually fails.
- You need a needs assessment before anything else. Call Seniorline on 0800 725 463 to get that process started, it is free.
- If you are 65 or older the subsidy can be backdated up to 90 days before MSD received your application, so apply even if you are already in care and paying.
In this guide
Moving a parent or partner into a rest home is stressful enough before the money questions start. The Residential Care Subsidy, which most families just call the rest home subsidy, is the government payment that covers long-term care costs for people who pass a means test. This guide sets out the asset limits that took effect on 1 July 2026, the gifting rules, what actually happens to the family home, and how to apply.
How paying for rest home care works
Standard long-term care in New Zealand has a price ceiling. Every district has a maximum contribution, the most anyone can be charged for standard care, whether or not they get any subsidy. From 1 July 2026 it ranges from $1,513.33 a week in the cheapest districts to $1,634.43 a week in Auckland City, GST inclusive.
If you qualify for the subsidy, the government pays the difference between what the income test says you can contribute and the cost of your care. If you do not qualify, you pay your own way, but never more than the maximum contribution for standard care.
The exception is premium charges. Rest homes can charge extra for things beyond standard care, a bigger room, an ensuite, a view, but only under a written agreement you sign, and the subsidy never covers them. Our reporting on aged care funding covers how the sector is paid.
Who can get the subsidy
Two doors have to open. First, a needs assessment must find that you need long-term residential care in a hospital or rest home indefinitely. This is arranged through your local needs assessment agency, and the assessment itself is usually the interRAI tool used nationwide. Second, you must pass the financial means assessment run by the Ministry of Social Development.
The subsidy is for people aged 65 or older, and for people aged 50 to 64 who are single with no dependent children. That younger group gets a significant concession, they automatically pass the asset test, though their income is still assessed.
The asset limits from 1 July 2026
Your assets must be at or below the current thresholds for the subsidy to be granted:
| Your situation | Asset limit at 1 July 2026 | Home and car counted |
|---|---|---|
| Single, or a couple with both partners in care | $300,811 | Yes, counted |
| Couple, one partner stays in the community, option A | $164,731 | No, home and car exempt |
| Couple, one partner stays in the community, option B | $300,811 | Yes, counted |
Couples with one partner staying at home choose whichever option suits them. In plain terms, option A wins whenever the home and car are worth more than the roughly $136,000 gap between the two limits, which is nearly always, so the family home and car are simply left out of the test and your partner keeps living there. Option B exists for couples whose home is modest and whose other assets are low.
Counted assets include cash, savings, shares and investments, investment properties, boats and caravans, and money owed to you. Exempt assets include household furniture and effects, personal belongings, and pre-paid funerals up to $10,000 each for you and your partner.
If you live in a retirement village under an occupation right agreement, what counts is the amount you would actually get back if you left, usually your entry payment minus the deferred management fee, not what you paid. That difference commonly runs to 20 or 30 per cent, so do not overstate your own assets. The rules on how quickly operators must repay you were in the news recently, see our coverage of the three-month repayment policy.
The gifting rules for the rest home subsidy
When MSD assesses your assets it also looks at what you have given away. The allowable gifting amounts are per couple, combined, not per person, and this is the single most misunderstood rule in the system:
| Period | Allowed gifting | Cap |
|---|---|---|
| The five years before applying | $8,500 a year, you and your partner combined | $42,500 total |
| Any year before that | $27,000 a year, combined | No overall cap |
Anything gifted above those limits is treated as deprivation of assets and added straight back into your total, as if you still had the money. It does not matter who received the gift, children, grandchildren or a family trust.
A worked example. Joan and Peter gifted $20,000 a year to their daughter for the past four years, $80,000 in total. Peter now needs hospital-level care. Their allowance for those four years is $8,500 a year combined, $34,000. The extra $46,000 is added back to their assessed assets. If that pushes them over the $164,731 option A threshold, the subsidy is declined until their assets genuinely fall below the line. Gifting $10,000 each to two different grandchildren in the same year makes no difference, the limits are combined per couple, not per gift or per person.
Trusts and the subsidy
The most persistent myth in elder law is that putting the house in a family trust protects it from the means test. It usually does not. Under the Residential Care and Disability Support Services Act 2018, MSD can treat assets you have deprived yourself of as if you still own them, and transfers into a trust are gifts like any other. Everything above the allowances in the table gets counted back, whoever the trustees are and however long the trust has existed.
Income the trust earns can also be counted, and MSD looks at whether the trust structure as a whole amounts to deprivation. The Court of Appeal examined MSD’s approach to deprivation in May 2019 and forced a rework of how assessments are done, which is why older assessments can be reviewed, but the core look-through principle survived intact.
None of this means trusts are pointless, they exist for many reasons. It means a trust set up or restocked late in life, with the subsidy in mind, usually fails at the exact moment it was supposed to work. If you are thinking about restructuring, see a lawyer who does elder law before you touch anything, not after.
The income test
Passing the asset test gets you the subsidy. The income test then works out how much of the cost you contribute yourself before the subsidy tops it up.
| Counted as income | Not counted |
|---|---|
| NZ Super or Veteran’s Pension | Your partner’s earnings from work |
| 50 per cent of private superannuation payments | NZ or Commonwealth War Disablement Pensions |
| 50 per cent of life insurance annuities | Income from assets below the exemption, $1,306 a year single, $2,612 couple both in care, $3,918 couple with one at home |
| Overseas government pensions | |
| Trust or estate income | |
| Interest, investment, business and employment income | |
| Regular contributions from relatives |
In practice most of your NZ Super goes toward your care. You keep a personal allowance of $58.34 a week after tax for your own spending, plus an annual clothing allowance of $365.92. Both adjust every 1 April.
How to apply, step by step
- Get the needs assessment first. Call Seniorline on 0800 725 463 or ask your GP to refer you to the local needs assessment agency. The assessor, usually using the interRAI assessment, decides whether long-term residential care is needed indefinitely. Nothing else can happen without this certificate.
- Complete the Financial Means Assessment form. The needs assessor or Work and Income will give you the form. It covers assets, income and gifting for you and your partner, and you declare the lot.
- Attach the paperwork. Bank statements, investment statements, property valuations where relevant, trust deeds if a trust exists, and details of any gifts. Missing documents are the main cause of delay.
- Keep paying while you wait. You remain liable for care costs until the decision comes through, so budget for the fees in the meantime.
- Backdating protects you. If you are 65 or older, the subsidy can be paid from up to 90 days before MSD received your application if you qualified during that time. For 50 to 64 year olds it starts from the later of the needs assessment or entering care. Apply promptly anyway, the 90 days runs out fast.
If you do not qualify
Failing the means test is not a financial cliff. You still never pay more than your region’s maximum contribution for standard care, and the moment your assets fall to the threshold, you can apply again.
If your money is tied up in the house, the Residential Care Loan exists so you do not have to sell in a hurry. It is an interest-free government loan paid straight to the care provider, available broadly where your former home puts you over the asset threshold but your other assets are under $15,000 for a single person or $30,000 for a couple. MSD secures it with a caveat on the property, and it is repaid when the home is sold or within 12 months of your death, whichever comes first. Applications go through the same Seniorline number and take around six to eight weeks.
If you disagree with a decision
Decisions here come from two different places, and the challenge route depends on which one you are fighting.
The care-level finding. If the dispute is about whether long-term care is needed at all, ask the needs assessment agency for a reassessment, especially if health has changed since the last assessment.
The means assessment. If the dispute is about money, write to MSD asking for a review of the decision, say specifically what you believe is wrong, and attach the evidence. Deprivation findings, how a gift was counted, how a trust was treated and how an occupation right agreement was valued are all common and worth contesting. Community Law helps with these reviews free of charge.
One more avenue exists because of the courts. MSD’s deprivation methodology was found partly unlawful by the Court of Appeal in May 2019, and assessments done before 3 December 2019 can be reviewed on request, including by the estate of someone who has died.
Common questions
Will I have to sell the house to pay for care
Not while your partner or a dependent child lives in it, choose the $164,731 option that exempts the home and car entirely. If you are single and nobody dependent lives in the home, its value counts toward the $300,811 limit, but even then the Residential Care Loan lets you defer rather than sell in a hurry.
Does my partner lose the home if I go into care
No. Under the option A asset test the family home and one car are exempt while your partner lives there, and your partner’s earnings from work are not counted in the income test either.
Is the rest home subsidy the same as the Residential Care Subsidy
Yes. Residential Care Subsidy is the official name used by Work and Income and in the legislation. Rest home subsidy is what everyone else calls it. Same payment, same means test.
What happens to my NZ Super when I go into care
If you get the subsidy, most of your NZ Super goes toward the cost of your care. You keep the personal allowance of $58.34 a week after tax, plus the annual clothing allowance of $365.92, and any income under the income-from-assets exemption.
How long does the application take
Allow several weeks for the needs assessment and several more for the financial means assessment, longer if documents are missing or a trust is involved. The 90-day backdating for people 65 and over means a slow application does not usually cost you money, provided you get it in early.
Where to get free help
- Seniorline, 0800 725 463, free national information service on aged care, needs assessments and the loan.
- Age Concern, ageconcern.org.nz, local offices help families navigate care decisions.
- Community Law, communitylaw.org.nz, free legal help, including with means assessment reviews and trusts.
- Work and Income, the Residential Care Subsidy page has the forms and current figures.
Planning ahead matters here more than almost anywhere else in personal finance. Our guides on wills and what happens without one and relationship property cover the documents worth sorting before care is ever needed.
Have you been through a Residential Care Subsidy application? How long did it take, and what tripped you up? Share your experience in the comments, it could save another family weeks of confusion.
Working on a public holiday? See our full guide to New Zealand public holiday dates, pay rules and long weekends.