Hello everyone. In 2012 I purchased a home to live in. In 2017 I financed and built a granny flat for my disabled mum, on centrelink, to live in. At the time, my accountant did ask what the plan was in future, and I told him my mum will live there, paying below market rate rent weekly as she didn't have savings (250, when it's 400-450 market) while she is alive and until she can secure housing commission. He then asked when she moves on what is the plan, and I said to rent out to strangers at market rate through a real estate. Fast forward now, I am a single mum to a 1.5 year old who has multiple health issue (heart/feeding/physical/behavioural) and I had to leave work to care for her and am also on centrelink. My mum has been okayed for housing commission, and I have decided to sell as I don't trust strangers, I am not working, if they don't pay I could lose everything as I can't work and am planning to downsize/buy something with little mortgage less than 50k(a unit). Am I going to pay CGT? Or will ato consider change in circumstances?
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3 replies
Hey @Cinderella123,
For a granny flat to be exempt from CGT there must be a granny flat arrangement in place. It must:
- be in writing
- indicate an intention the parties are legally bound
- not be commercial in nature
There are several scenarios available on our website which may help you to determine the CGT implications for granny flat arrangements when it comes to selling the property.
All replies
Hey @Cinderella123,
For a granny flat to be exempt from CGT there must be a granny flat arrangement in place. It must:
- be in writing
- indicate an intention the parties are legally bound
- not be commercial in nature
There are several scenarios available on our website which may help you to determine the CGT implications for granny flat arrangements when it comes to selling the property.
Hi Anita thank you so much for your response. We have a verbal agreement but can definitely put it on paper. What is "commercial in nature"? I have read the link, my concern is if we've deducted depreciation during tax returns, does that make it commercial? Commercial in my mind is anything that is done to turn a profit, is claiming depreciation the same? We filled out a Tennant agreement downloaded from Fair Trading just to formalise it, but no bond or anything has been taken, it was more for the tax return and when centrelink asks her what she is paying.
Hey @Cinderella123!
Ahhhh okay! This is a little more complex, I think it would be beneficial for you to run your situation by our Tailored technical assistance team who would be able to advise the process moving forward for you!
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