Building a Granny Flat

I was wondering, if i purchased a property and i plan to live in the property as my PPOR, can i build a secondary dwelling (granny flat) and rent that out?

If i was to solely build the granny flat for the purpose of renting it out can i claim the building costs / interest payments on it?

Im guessing i will probably lose the CGT for that portion of the property?

Can i claim a portion of the interest payments on the PPOR?
 
I was wondering, if i purchased a property and i plan to live in the property as my PPOR, can i build a secondary dwelling (granny flat) and rent that out?
Yes, sure. Why not?

If i was to solely build the granny flat for the purpose of renting it out can i claim the building costs / interest payments on it?
Yes, it fits the 'purpose' test of your borrowings.

Im guessing i will probably lose the CGT for that portion of the property?
Yes

Can i claim a portion of the interest payments on the PPOR?
Only the part that relates to your borrowings for the GFlat, I think?? Although I am not sure about the land component of the GFlat. Perhaps an accountant could help on this point?
 
The land under the granny flat would be subject to CGT if you rent out the granny flat. I think you will need to do a valuation and apportion the land value before you build. Speak to your accountant.
 
Granny Flat

Hiya

Just finished my IP renovation in Greystanes which has a granny flat (unauthorised). I engaged a private certifier to side step the local council and with some minor renovation (mainly putting in a fire wall on one side), manage to convert it into an authorised granny flat. This boosted my rental to 230+ 370 on a 385K purchase (plus reno about 30K brand new kitchen, bathroom, deck etc).

I've learnt so much with this process and am starting to put together research into builidng a granny flat behind my PPOR. Things to note:

1) before building, to get a valuation done on your PPOR before and after granny flat is put in. This is to aid in your CGT calculation should you sell in the future.

2) Check for S94 contributions from local council. For me luckily Holyroyd Council charged me $399 . Lane Cove apparently is 9K and Hornsby 8K::eek:

3) Check whether you can separate the main house from granny flat with a fence. (very important for tenants separation).

4) Get a private certifier who will work with/for you to aid you throughout the whole process.
 
Granny Flat

Any reason why you wouldnt rent both out?


Hi Nek

Wondering whether you have gone ahead with the granny flat on your IP? Care to share the costs?

I was quoted 100 to 120K for a 1 bedroom, 1 bathroom granny flat (brick); but property agent was telling me if i get a owner builder licence from Office of Fair trading, get a draftsman /achitect to draft up my plans, i can probably build for 40-50K:confused:


I am no builder but hey thot i'll give it a go if this is true...

Anyone has any comments whether this is possible? Granny Flat 60 sqm...
 
Hi Virgo,

I've heard of ppl using pre-fabricated ones like this http://www.parkwoodhomes.com.au/.

Haven't used them personally but I was told it's a lot cheaper and faster too.

How do you charge your tenants for electricity or do you pay for it yourself?

If you don't mind can you please PM me the details of the private certifier? I'm not far from where you IP is.:p Thx.
 
3) Check whether you can separate the main house from granny flat with a fence. (very important for tenants separation).

Whats the deal with this here? I keep hearing different stories.

From Council
1. Fence doesnt require DA approval
2. Fence requires DA approval
3. Fencing within your property to divide your property is not allowed as you are then trying to subdivide without subdividing
4. You can build a granny flat on your existing property and rent both property and granny flat out, its got nothing to do with us.

From everyone else in general.
1. You dont need council approval to put a fence in the middle of your property
2. Wait until the granny flat is fully complete, certifier has come out for an inspection and signed off, then put the fence up.

So many different stories, its driving me mad. Cant even get a straight answer from the Council. :mad:
 
Hi Nek

Wondering whether you have gone ahead with the granny flat on your IP? Care to share the costs?

I was quoted 100 to 120K for a 1 bedroom, 1 bathroom granny flat (brick); but property agent was telling me if i get a owner builder licence from Office of Fair trading, get a draftsman /achitect to draft up my plans, i can probably build for 40-50K:confused:


I am no builder but hey thot i'll give it a go if this is true...

Anyone has any comments whether this is possible? Granny Flat 60 sqm...

Yep, mines currently in progress.
100-110k for
60sqm (exluding patios etc) granny flat
Concrete slab
Leveling of floor
Home Owners warranty included (so no Owner builder path)
Drawings of plan + submission to private certifier
Granny flat construction = Vinyl stuff that looks like weatherboard from afar (so no painting required)
Internal = Plasterboard, 2.7m high ceilings, toilet, vanity, bathtub, laundry tub, kitchen sink, cooktop, oven, tiles, carpet.

To give you an idea of the 40k-50k price, that sounds like a build price and does not include the actual supply of materials. So add another $40-50k to supply, then a further $5k - $10k for demolition and leveling, then private certifier costs of 3k, then architect fees of 2k - 3k.

I thought about going down that path, but then that meant too many people to deal with in an area that I have no idea what to do. If something goes wrong, theres no one to really help me (Guys like Serge have offered to me help when things go wrong, but in reality I cant expect to take up hours of his time and give him nothing in return for it, its just wouldnt be fair to expect him to work for $0).

Furthermore, I summed up all my costs
$50k to supply materials
$50k to build
3k for certifier
2k to draftsman
$105k all up.

For a small saving is all that stress and headaches worth it, especially if you've never done construction before?

At least if something goes wrong, Ive got someone to yell at and they are required by law to rectify it (plus i dont have to pay them the final $5 until 3 months after the property is finished!). Nothing is worse than finding a fault, but then get involved with the blame game

eg something goes wrong in the building, the plasterer blames the plumber, the plumber blames then carpenter, the carpenter blames the plasterer and it all goes back and forth.

I'll pay the extra and save myself that pain.
 
Yep, mines currently in progress.
100-110k for
60sqm (exluding patios etc) granny flat
Concrete slab
Leveling of floor
Home Owners warranty included (so no Owner builder path)
Drawings of plan + submission to private certifier
Granny flat construction = Vinyl stuff that looks like weatherboard from afar (so no painting required)
Internal = Plasterboard, 2.7m high ceilings, toilet, vanity, bathtub, laundry tub, kitchen sink, cooktop, oven, tiles, carpet.

If it's around 100-110k, how much would it rent for?
 
$350 or so.
Existing house has had its rent dropped down from $430 to $400.

However I am including water usage in the rent for both properties.

I may consider getting a water meter installed so I can measure the amount of water used for the granny flat, but ill see how much it costs.

Im definitely not going to get a 2nd connection and let Sydney water slug me an extra $150 pq.
 
I was wondering, if i purchased a property and i plan to live in the property as my PPOR, can i build a secondary dwelling (granny flat) and rent that out?
If you're going to build a new house why don't you build a bigger house and pick a design which can easily be modified for an attached granny flat?
You can also run separate electrical lines and plumbing to each part of the building so they will be ready for later on when you want to separate the 2 areas
 
Anyone know anything about Perth? Can folks in the west take the private certifier route also? Those rules are Nsw specific. Would be great to know what general info there's is regarding western australia
 
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