Granny flats are being seen as a quick and affordable way to help the housing crisis, with many state governments easing planning restrictions to enable construction. or signup to continue reading There can be a myriad of benefits to the once humble granny flat. They can offer secure and comfortable homes that are purpose-built for ageing, ease social isolation and enable multiple generations to pool their financial resources and provide care and support to each other.
While many people think of granny flats as a second, self-contained, dwelling built on someone else's property (the real estate definition of a granny flat) granny flat arrangements are actually far broader and can include a whole home or part of a home you don't own but have a right to live in. This can include your current home or one you buy or build in your children's name. The key point is you don't have legal ownership: if you do it is not considered a granny flat arrangement.
Common ways granny flat arrangements are created are: the parents transfer their home to their children for a granny flat right; parents pay for a granny flat to be built on the children's property; or the parents and children pool their funds and purchase a new property in the children's names. In July 2021, the federal government removed the capital gains tax liability associated with some granny flat arrangements. Prior to this the Australian Tax Office considered granny flat arrangements as a D1 capital gains tax event, with the.