CGT exemption for Granny Flats! What this means for you!
Building a Granny Flat has become even better thanks to the New South Wales’ government’s new announcement on Capital Gains Tax. This means that more Granny Flat’s will built across New South Wales as a means of keeping family closer.
Let us explain. . .
So, what is Capital Gains Tax?
Capital Gains Tax, otherwise referred to as CGT, applies to any asset acquired (since 20 September, 1985), unless specifically excluded. Majority of personal assets, such as primary home and cars are exempt from CGT; However, investment properties and shares are included. This also includes Granny Flats!
For example, if you were renting your Granny Flat to a third party, any capital gains made since the time the Granny Flat was built would be subject to CGT when selling the property.
Because of this, many homeowners shy away from the idea of building a Granny Flat on their block.
What is the government doing to help?
With the devesting impacts of COVID-19 pandemic on the economy, the government is continuing to release new incentives to help Australian’s financially such as the Home Builder and Job-Keeper grants.
Another incentive regarding CGT has been announced, designed to help homeowners and elderly Australians.
From July 2021, an exemption from CGT will come into place for Granny flats.
This means, If the Granny Flat is occupied by a family member of someone with personal ties – such as an aging or disabled relative – the Granny Flat may be exempt from CGT, if a written agreement exists.
Homeowners can now keep family members closer without having to worry about GCT later!
“When faced with a potentially significant CGT liability, families may opt for informal arrangements, which can leave open the risk for financial abuse and exploitation, for example, following a family or relationship breakdown,”
Josh Frydenberg, Treasurer
Without the worry if a CGT, the concept of building a Granny Flat for a family member becomes more convenient to the homeowner.
With Granny Flats increasing in popularity over the last five years in NSW, majority of Granny flats currently being built by RESCON are for family members, as a way of keeping parents, grandparents and elderly relatives closer, especially during the COVID-19 period. It’s a fantastic way of knowing your loved ones are nearby, whilst still maintaining privacy.
“RESCON handles everything from design and approval, through the construction, We can help create the perfect Granny Flat to keep your family closer. This incentive announced by the government makes building a Granny Flat even more worthwhile.”
Ramon Dunlany, RESCON Senior Sales Consultant