Subdivision - Transfer Title under granny flat provisions to keep pension

[MelbTL]

Hi all,

My mum would like to transfer her fully paid off home over to me under the granny flat provisions which she qualifies under the reasonableness test amount.

My concern is after receiving the title, can I demolish, subdivide and build a duplex on it (one for her to live in for life) and not affect her pension in any way?

Also to reduce stamp duty fee, I would like to demolish the property before transferring the title across to me. Will this affect the granny flat provisions and also her pension?

Any help would be great.

Thanks,
TL

 

[Terry_w]

Usually with disposal of an asset it is still considered as owned for a period of 5 years for social security purposes.

With granny flats there are special rules. There are life tenancy issues and CGT issues as well as social security issues so best to seek specific legal advice.

 

[Paul@PFI]

Ahhh. Terry this isnt always the case. There is a Centrelink Granny Flat concession that is often ignored. It can bypass the deeming rules and gifting rules. Mum could actually get a pension.

Eg : Mum can build a GF and move in. Gift her home to her kids and its possible that the GF value isnt a gift subject to deeming.

I would always encourage those considering Centrelink asset, income and other rules to seek advice from specialists in aged care. There are many aspects of a Granny Flat strategy that could bite the parties involved later...eg Mum need to go into care etc....My biggest concern with advising on these very complex strategies is legal liability. Its possible to result in a dire outcome and I could be used for advice that favours members of a family and harms others. I'm not keen on open discussion of such issues as it can be detrimental in many cases. But yes it can be done.

Happy to accept enquiries in my direct email below. One of my collegaues raised this very issue last friday and I said same as terry to be shocked by the lesson he gave me. I will have him address any reply.

 

[Paul@PFI]

Hi all,

My mum would like to transfer her fully paid off home over to me under the granny flat provisions which she qualifies under the reasonableness test amount.

My concern is after receiving the title, can I demolish, subdivide and build a duplex on it (one for her to live in for life) and not affect her pension in any way?

Also to reduce stamp duty fee, I would like to demolish the property before transferring the title across to me. Will this affect the granny flat provisions and also her pension?

Any help would be great.


Thanks,
TL

Maybe. Centrelink's reasonable test has a look through test before and after the build. I would expect to see a lawyer form a life tenancy that isnt affected by this issue. You may have to provide mum with rented accom during the build perhaps ??? Its one of my concerns.

Stamp duty still applies. You cannot demo a property that isnt yours. Valuation would be land which then fails. So no. She cant have a residence that is just land. Its no residence and a CGT issue occurs for mum. She cant have life tenancy for vacant land under the Centrelink rules. FAIL.

 

[Terry_w]

Ahhh. Terry this isnt always the case.

Yes, that is why i mentioned there are special rules for granny flats.

Here is some info
http://www.humanservices.gov.au/customer/enablers/assets/granny-flats


And a 'granny flat' does mean just a granny flat, but has a wide meaning and can include a life interest in a property owned by another. e.g. an interest to reside in the main home of an adult child. see s12A of the Social Security Act

 

[MelbTL]

Many thanks for the response.

I don't intend to build a Granny flat, but intend to use the granny flat provision.

The property was purchased 30 years ago so I believe CGT should be exempt if the property is transferred to me. As for accommodation for my mum while the house is being built, wouldn't be an issued as she will stay with us during that time and we're happily to care for that.

Hopefully after receiving the title, I'll be able to subdivide, demolish and build a duplex without affecting my mums pension under the life tenancy.

 

[Terry_w]

Many thanks for the response.

I don't intend to build a Granny flat, but intend to use the granny flat provision.

The property was purchased 30 years ago so I believe CGT should be exempt if the property is transferred to me. As for accommodation for my mum while the house is being built, wouldn't be an issued as she will stay with us during that time and we're happily to care for that.

Hopefully after receiving the title, I'll be able to subdivide, demolish and build a duplex without affecting my mums pension under the life tenancy.

Sub-division will affect a life tenancy. Get specific legal advice.