Did you know the federal budget includes a capital gains tax exemption for granny flats?
This is fantastic news for anyone interested in adding a Funky Little Shack to their backyard. It is hoped this measure will allow more families to care for elderly or disabled family members on their property, while also boosting the construction industry.
According to government figures, there are around 7.9 million Australians either on a pension or living with disability, so this tax incentive could be a total game changer for many families.
So how can you ensure your Funky Little Shack is capital gains exempt when it comes into effect? Here are the important details…
Who Is It For?
The CGT exemption for granny flats is expected to start in July 2021. The exemption will apply to granny flats that are either stand-alone or attached to the main home.
It can only be accessed by people building the granny flat to support a disabled or ageing family member, or “people with other personal ties”. And you will need to enter a written agreement to protect all parties.
Tick those boxes and you’re on the right track!
What Do I Need?
As stated, you will need a detailed written agreement to successfully benefit from the capital gains tax exemption for granny flats.
Federal government claims it wants to decrease the risk of financial abuse, as well as the exploitation of the elderly, or those living with disability. Many granny flat arrangements between family members are considered informal, so it’s something to think about when considering the idea.
Having a legal written agreement will help protect those vulnerable in the unfortunate event that the relationship breaks down.
What Would An Agreement Look Like?
Our number one piece of advice here is to seek qualified legal assistance when putting a written agreement together.
While every family is entitled to their own choices, there are a multitude of potential issues that could arise. With proper legal advice all parties should have a clear understanding of what they’re getting into.
You’ll need to decide whose names are on the deeds, who is responsible for the bills, what kind of share both parties have in the property, and how things will go if someone wants to move out.
Best to speak to a legal professional to help sort out all the important details.
What Is My Tax Implication If I Build A Granny Flat Before The New Rules Comes Into play?
Each person’s tax situation is different, depending on your circumstances.
Contact your accountant for advice, and a lawyer on setting up your family agreement.
I Want To Learn More!
Want to learn more about the benefits of investing in your own small home or granny flat? Give us a ring on (07) 5679 6171 or email firstname.lastname@example.org. We’ll help you cut down on household bills, keep loved ones close, and still live in luxury.
We create custom homes ranging from $100,000 to $200,000, depending on size and location. We also design plans from just $2995, which you can take to the builder of your choice.
Head here to see your options. We’d love to have a chat and help you out.