Found an interesting article on Granny Flats and CGT for those who are building a granny flat at their PPR.
http://www.bantacs.com.au/QandA/index.php?xq=435
http://www.bantacs.com.au/QandA/index.php?xq=435
Living in Granny flat and renting main house CGT implications
- Thread starter neK
- Start date
Code:
"If the Granny flat is used as a rental right from the start not only
will you lose the main residence exemption retrospectively [B]on the land
under the Granny flat[/B] but you cannot use section 118-192 to reset the cost
base because they are two separate dwellings. "That is simply, you can't claim the 'main residence exemption' on the proportion of the Granny flat. That makes sense doesn't it?
I have a complicated scenario.
We bought a PPOR in 2006.
Moved out in 2009 another place which is not a PPOR.
Built a GF in 2011.
What if we occupy both (main house & gf) just before the 6th year end?
It is going to be interesting to calculate the CGT in the future!
In our case we've had the house 20 years. If I sold next month I would lose the PPOR exemption on that part occupied by the GF for the last 20 years, even though the GF has only been available for occupation from January 1 next year. That could be a substantial amount which Mr ATO would get, so I wouldn't like to lose it. It may be as simple as getting our daughters to live there for a brief time.
Common sense should dictate, that even if it's been there for 20 years, the fact that it wasn't available for rent should mean that you DONT lose the PPOR exemption.
You would never have lived in the GF before renting it so the main residence exemption wouldn't apply to this. It may after you move in.
Main residence exemption won't be applicable to only the GF portion right?
I know.....but.....you've always had the Granny Flat, haven't you? If that's the case, & it's been sitting there for 20 years, I'm sure you've used it for something. Maybe only for storage, but that is still family use.
So, wouldn't that mean that it should already be considered part of the house.
Or, do they consider that because you are now getting it through the approval process, that it is a new build?
Hi Geoff
Seems that you may have set it up as your office or any other personal use for a period of time before renting it out.
Seems to indicate that for 6 months (or other suitable period) after finishing the build and having proof when you finished build, you leave it empty /for personal use to establish that it is part of your main residence.
Don't know how you would proof the personal use but in the examples they have managed to proof their case. Maybe through personal affidavits.
No matter what you will need to make sure you carry out the correct steps with appropriate records to cover your bases.
Cheers
Seems that you may have set it up as your office or any other personal use for a period of time before renting it out.
Seems to indicate that for 6 months (or other suitable period) after finishing the build and having proof when you finished build, you leave it empty /for personal use to establish that it is part of your main residence.
Don't know how you would proof the personal use but in the examples they have managed to proof their case. Maybe through personal affidavits.
No matter what you will need to make sure you carry out the correct steps with appropriate records to cover your bases.
Cheers
Thanks Handyandy.
While it may be hard to prove some things it would be easy to prove other things. So a lease start date is easy to obtain, but it would be difficult to prove, as given in Julia's example, that family members always came to the house for meals.
Our daughters are home after several years overseas. They would love the chance to be able to have their music up loud and have friends over at all times of night or day, while still coming home for meals and washing.
While it may be hard to prove some things it would be easy to prove other things. So a lease start date is easy to obtain, but it would be difficult to prove, as given in Julia's example, that family members always came to the house for meals.
Our daughters are home after several years overseas. They would love the chance to be able to have their music up loud and have friends over at all times of night or day, while still coming home for meals and washing.
Prob not if it has not been lived in as part of the main residence.
