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Granny Flats and CGT – Changes in the 2020 Budget posted on the 16th October 2020
There’s good news for many Australians in the latest budget and it’s great to see that families with Granny Flats can reap some benefits too!
Budget 2020: Building a granny flat? There’s a capital gains tax exemption for that
Stephanie Palmer-Derrien, Smart Company
6 October 2020
Ahead of tonight’s budget, Treasury has revealed a capital gains tax exemption on ‘granny flats’, in a bid to provide safe accommodation for elderly or disabled Australians, and to boost the construction sector.
A joint statement from Treasurer Josh Frydenberg and Minister for Housing Michael Sukkar outlined plans for scrapping capital gains tax (CGT) for granny flat situations, particularly where there is a formal written agreement in place.
The measure is intended to help support older and disabled Australians and their families, by making it easier for them to stay close to family members or close contacts, potentially allowing them to stay more independent for longer.
Currently, capital gains tax acts as an impediment to formalising granny flat accommodation agreements, thereby leaving them legally unenforceable, the statement suggests.
“When faced with a potentially significant CGT liability, families may opt for informal arrangements, which can leave open the risk of financial abuse and exploitation, for example following a family or relationship breakdown.”
Under the new measure, which is expected to be implemented as of July 1, 2021, CGT will not apply to formal granny flat arrangements providing accommodation for older Australians, or people with disabilities.
It will only apply, however, to arrangements between family members, or people with other personal ties.
It will not apply to commercial rental agreements.
According to the release, about 3.9 million pensioners and about 4 million people with a disability are expected to be eligible for the scheme.
But, it’s also partly geared towards boosting the construction industry, potentially stimulating demand for small builds in back gardens.
Get ahead of the tax changes and
start planning your Granny Flat now!!
Let us help you on your way…
Sonia Woolley
0403 309 136
Written by Sonia Woolley