Hello, hope you are able to help me do the right thing
We will have a two storey house built soon. It will include a 'Granny Flat' which will be rented out. Because we are in a flood prone region we will have the Granny Flat built on a 'Workshop' or Garage below that will be for our use only.
We need to correctly apportion for tax deductibility purposes and for Capital Gains when the house is sold.
Apportion by Area:
From approved plans, the areas in square metres are-
Main Ground Floor 79, First Floor 119, Terrace and Porches 90, Garages/workshop 90
Granny Flat 51, porches 9
Possible Method A: Just use total areas of Granny Flat available for rent compared to total floor area (Ground + First Floor)
Total area: 60/(79 + 119 + 90 + 90 + 60) = 60/438 = 13.7%
B
Ignore the lower cost parts of building - garage, workshop, terrace, porch (much cheaper to build parts)
51/(79+119) = 51/198 = 25.76%
C
Get the builder to quote separately for the two parts
Should the land value under the Granny Flat also be taken into account in some way?
If e.g using method C the cost of the Granny Flat build is 20% of the total, would we use 20% in the calculation of CGT someday down the track?
Or should we be doing something else altogether!
How would you proceed?
Many thanks to any responders
We will have a two storey house built soon. It will include a 'Granny Flat' which will be rented out. Because we are in a flood prone region we will have the Granny Flat built on a 'Workshop' or Garage below that will be for our use only.
We need to correctly apportion for tax deductibility purposes and for Capital Gains when the house is sold.
Apportion by Area:
From approved plans, the areas in square metres are-
Main Ground Floor 79, First Floor 119, Terrace and Porches 90, Garages/workshop 90
Granny Flat 51, porches 9
Possible Method A: Just use total areas of Granny Flat available for rent compared to total floor area (Ground + First Floor)
Total area: 60/(79 + 119 + 90 + 90 + 60) = 60/438 = 13.7%
B
Ignore the lower cost parts of building - garage, workshop, terrace, porch (much cheaper to build parts)
51/(79+119) = 51/198 = 25.76%
C
Get the builder to quote separately for the two parts
Should the land value under the Granny Flat also be taken into account in some way?
If e.g using method C the cost of the Granny Flat build is 20% of the total, would we use 20% in the calculation of CGT someday down the track?
Or should we be doing something else altogether!
How would you proceed?
Many thanks to any responders