Granny Flat Agreements

This is a companion site to our main website and provides dedicated information about:

  • Granny flats/granny flat agreements
  • Disputes about granny flat arrangements

Legal – financial advice

Legal advice and specialist financial advice go hand-in-hand:

Solicitors are not usually qualified to give financial advice. It is accordingly very important that family agreements and granny flat agreements be prepared by the solicitor in close consultation with a financial adviser.

There can be all sorts of financial implications, including Centrelink pension issues, but also other issues in relation to Centrelink asset tests, taxation and capital gains tax implications and stamp duty implications. Also, children who are providing care and who may give up employment to do so, often require appropriate financial advice.

 

Tax news:

On 1 July 2021 legislation to eliminate or ameliorate capital gains tax in granny flat situations became operative.

In some situations capital gains tax “events” occured (for both the “grannys” and those providing the accommodation) when property was transferred to create granny flat arrangements.

This was sometimes unintended and created a disincentive to people seeking to enter into these arrangements.

In summary the legislation provides that no capital gains tax will apply if:

  • The agreement is in writing and is binding on the parties
  • The agreement is not commercial in nature
  • The agreement is between individuals (not corporate entities)
  • The agreement sets out the circumstances in which it can be varied or terminated
  • The person being given the granny flat interest is of pension age or requires assistance for day to day activities because of a disability

 

It is important to note that not all associated capital gains tax events will be exempted.  For example, if shares are sold to pay for a granny flat interest, there may still be the normal capital gains tax on any capital gains on those sales.  It is accordingly important to seek appropriate financial advice.

The link below is to a summary page about this topic on the ATO’s website:

https://www.ato.gov.au/individuals/capital-gains-tax/property-and-capital-gains-tax/granny-flat-arrangements-and-cgt/

 

Why Choose Us?
Dedicated practice

We are one of the few legal firms in Australia who advise in relation to granny flat agreements on a regular basis.

Efficiency

We make extensive use of technology to streamline document production. This significantly reduces the time we have to spend on drawing agreements.

Cost effective

Because of this experience in this area and our process efficiencies we can get matters finalised in a cost effective manner. Ask us about our fees.

Experience

The principal, Peter Gauld, has been practising in this area for fifteen years, and in relation to granny flat disputes he has had 30+ practising in dispute resolution.