Granny Flat Investment on PPOR?

[SuiCid3]

If building a GF, for investment purposes, on your PPOR.
How would this work for tax purposes?

I'm assuming the loan interest for the GF, if there was one taken out, would be tax deductable.

How would this affect everything else regarding the PPOR for tax purposes? CG repurcussions?

 

[Propertunity]

If you use the granny flat to generate income:
1. Any loan interest would be tax deductible.
2. You can also claim depreciation.
3. You will need to declare the rent as income.
4. It will partially affect your PPORs CGT-free status as part of it is being used to earn an income.

 

[SuiCid3]

If you use the granny flat to generate income:
4. It will partially affect your PPORs CGT-free status as part of it is being used to earn an income.

I'm curious how it would be calculated for this? Through FSR? Actual value?

 

[devank]

4. It will partially affect your PPORs CGT-free status as part of it is being used to earn an income.

What if that property is under the '6 year rule' CGT exemption? That would make things a bit complicated isn't it?

 

[Propertunity]

I'm curious how it would be calculated for this? Through FSR? Actual value?

These things are usually worked out on a floor m2 basis. But check with your Accountant.

 

[Propertunity]

What if that property is under the '6 year rule' CGT exemption? That would make things a bit complicated isn't it?

Interesting......

At a complete guess, I'd reckon you'd need to build the granny flat while living in the PPOR, not rent it out until you move out, rent both the GFlat & PPOR under the 6 yr rule, move back in within 6 yrs, and then not rent the GFlat again, in order to maintain the CGT-free status.

But as I said, this is a complete guess, not advice.

 

[Terry_w]

This is actually a complex question.

Firstly the 6 year rule wouldn't apply unless you are absent from the property.

There are a few strategies you can implement to reduce the CGT on an eventual sale.