Yields for Granny Flats

Hiya

So, i am cooling off for a recent purchase on a house with a granny flat. Yields are okay,
not that fantastic (530 pw on a 385K house).

That set me thinking.....(hubby hates that whenever it happens, as it means i am on another scarry brainwave that will force him out of his comfort zone:p)

How about i put in a granny flat on my own block?:D

Then i went about calculating the yields and i received a shock!!

Estimated rent (i called real estate agent): 250 per week (1 bedroom, 1 study)

Costs (approximate) : $70,000

Yield : 18.6% (unbelievable)

Questions:

1) SOMEBODY please correct me : is there a catch??:eek:

2) will this devalue my own house? (i'm on a 990 sqm block...in the Hills District)

3) anyone has done it ie put a granny flat on their own PPOR and rented it? any major privacy issues? any other concerns? (i've got 3 young kids)

Thanks!
 
So, i am cooling off for a recent purchase on a house with a granny flat. Yields are okay, not that fantastic (530 pw on a 385K house).
Yeah a pathetic 7.15% :rolleyes: Are you never satisfied? :D

Estimated rent (i called real estate agent): 250 per week (1 bedroom, 1 study) Costs (approximate) : $70,000
Yield : 18.6% (unbelievable)
Yep. Would this yield make you happier? or do you want more? :cool:

1) SOMEBODY please correct me : is there a catch??:eek:
Yes - you will have to share some of your yard privacy.

2) will this devalue my own house? (i'm on a 990 sqm block...in the Hills District)
NO. It will add value. It will also appeal to less of a market if you ever come to sell. But a swimming pool will do that too.

3) anyone has done it ie put a granny flat on their own PPOR and rented it?
Yes

any major privacy issues?
Minor if you are clever with fencing / screening / side entrances etc.

any other concerns? (i've got 3 young kids)
Don't rent to unsavoury characters. Check references carefully.
 
Granny Flats

Hiya

3 Questions about granny flats erected on your PPOR:

a) How does it affect your CGT free status when it comes to selling your PPOR down the track?

b) How does the Tax Dept treat this income? Is it split according to your PPOR ownership status? (eg. in my case, PPOR is 50% wife; 50% husband)

c) Is it possible to get a SEPARATE loan for the granny flat from the bank?

Thanks!
 
3 Questions about granny flats erected on your PPOR:

a) How does it affect your CGT free status when it comes to selling your PPOR down the track?
That's a very interesting Q. The rules have been to date, that if part of your PPOR is used for income generating purposes, that means that part of your PPOR will lose its CGT-free status.
Not an issue if you never sell. But a VERY good Q, virgo.


b) How does the Tax Dept treat this income? Is it split according to your PPOR ownership status? (eg. in my case, PPOR is 50% wife; 50% husband)
Again, past rules have it split in the % of ownership.


c) Is it possible to get a SEPARATE loan for the granny flat from the bank?
I don't see why not as long as you meet their lending criteria. Where else were you planning to get money anyway? savings:p:confused: LOL
 
Hiya

3 Questions about granny flats erected on your PPOR:

a) How does it affect your CGT free status when it comes to selling your PPOR down the track?

This is not advice, and I know I did the wrong thing in the past, but ignorance is bliss, isn't it?

In our first PPOR, we had a small dodgy Granny Flat. We didn't have any IP's at this time and knew nothing about CGT, etc. We rented this out to a student for a while, cash in hand. The income was not declared, and the costs were not claimed. This was at a time when we were severely in financial hardship, over 20 years ago.

Eventually, a door was cut through and it became part of the house.

When we sold it, it did not affect the CGT free status, because it was all cash in hand. In fact, we didn't realise that it would have affected this until we started our IP journey.
 
a) How does it affect your CGT free status when it comes to selling your PPOR down the track?

Have a go at the CGT exemption tool from the ATO website. It looks like it's based on the loan interst percentage i.e. the portion of granny flat loan from your total loan..

I plugged in some values and the percentage of capital gain to be offset didn't take into account the portion of time that part of the ppor is income producing :confused: might be worth calling the ato to confirm..
 
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