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Taxes May Apply to Granny Flats

Taxes on Granny FlatsYou might remember reading an article about the initiatives of the NSW Government in simplifying the planning laws for Granny Flats. If you haven’t had the opportunity to catch that article then please visit The Granny Flat Makes a Come Back. Be sure to download the NSW Government document on Granny Flat Planning Regulations under the new SEPP too.

Some other interesting reading is an article from the Manly Daily newspaper: Beware! Hidden Granny Flat Tax.

Prior to building your granny flat (either stand alone or as a home extension) you need to consider its purpose and if it is to rent out, whether the rent is paid by family or not – then you have to consider the tax implications.

When doing this it is wise to seek specialist tax advice. Remember if you are building the granny flat as an investment option then you should ask what your entitlements are in relation to the cost of construction. Whilst at the same time you must consider the capital gains tax issues you will face when you sell your property – given that part of it may well be subject to capital gains tax because of the rent recieved on the granny flat.
If you need any further guidance on this issue – or if you’d like some advice on how to build your granny flat, please contact us.

The Granny Flat Makes a Come Back

Adding Granny FlatsIf you ask the government (local, state or federal) they will call it a “secondary dwelling”. If you ask the public what that means you will get a blank stare. But ask the public what a Granny Flat is and you will get instant recognition.

The context of this article is based on these facts:

  1. There is a severe shortage of affordable rental housing in Australia.
  2. Housing affordability continues to rise in Australia making it one of the least affordable countries in the world now to purchase a home. 
  3. Governments are recognising this.

A Granny Flat planning document was recently issued by the NSW Government. If you live in NSW and are considering building a Granny Flat on your property then it is well worth a read.

The document is titled: Supporting Affordable Rental Housing – Granny Flats (Secondary Dwellings) and can be downloaded through this link: NSW Govt Granny Flats

The NSW Government are doing everything they can to make building a Granny Flat easier. They are providing a dedicated State Environmental Planning Policy (SEPP) to cover all local council areas.

In the past Granny Flats were only permitted by local councils under very strict and complicated local planning and environmental plans. The new policy is state based and is basically the state government saying to local government, “This is the way it is”. The NSW Government sees this as a logical (and some would say radical) plan towards boosting the supply of rental accommodation.

Owner Building a Granny Flat is a great option. There are 3 basic options:

  1. Convert part of your existing home into a Granny Flat. 
  2. Build an extension onto your existing home and turn this into a Granny Flat.
  3. Build a new fully detached Granny Flat on your property.

Now there are still a few rules you need to consider and the government document is a good a summary. Bear in mind that not all states have undertaken the same initiative as the NSW Government in promoting the building of Granny Flats, so do some research.

If you need help in assessing how to build a Granny Flat on your existing property then give us a call. We’d be delighted to help.