Removing a Granny Flat, Avoid CGT?

LAetheriance on 23/09/2023 - 14:10

Hi,

I'm looking at adding a Granny Flat to my property and renting it out, along with my house that is already rented out. (previously lived in the house for 2 years)

I believe that once I add a Granny Flat, part of my property will be eligible to pay CGT despite adhering to the 6 year rule. What would happen if the modular granny flat was removed from it's piers and sold/disposed of prior to selling the property. How can the Granny Flat have had any impact on the properties appreciable value if it is no longer there? Would this allow me to avoid paying any CGT?

Financial

Comments

  • freefall101 on 23/09/2023 - 15:11
    +2

    Talk to your accountant. Answer is you'll still be paying CGT though.

  • GordonD on 23/09/2023 - 15:24

    Tiny house.

  • Malik Nasser on 23/09/2023 - 15:30

    I don't have an answer for your, but a couple of things to think about:
    Will you be claiming depreciation for the newly built Granny Flat whilst it is being rented out?
    Is the cost of removing the Granny Flat less than or more than the amount of tax you would have pay if you sold the property with the Granny Flat still there?
    The cost of the Granny Flat adds to the cost base of your property, so you will want to have a property valuation before building the Granny Flat.

    • Aetheriance on 23/09/2023 - 16:39

      Will you be claiming depreciation for the newly built Granny Flat whilst it is being rented out?
      That would be a tricky one if I sell the Granny Flat as a structure later. Not sure about implications.

      Is the cost of removing the Granny Flat less than or more than the amount of tax you would have pay if you sold the property with the Granny Flat still there?
      Moving costs aren't that expensive. I'm thinking modular granny flat with crane anchor points.

      The cost of the Granny Flat adds to the cost base of your property, so you will want to have a property valuation before building the Granny Flat.
      I've been told by an accountant and financial adviser to get the valuation done immediately after building the granny flat. So that the cost to build the granny flat can be taken off the property value and any increase thereafter will be subject to proportioned CGT. thoughts?

  • pharkurnell on 23/09/2023 - 16:08
    +1

    Lots of effort for ………

  • Sinnerator on 24/09/2023 - 08:49
    -1

    every second house in Sydney either has a granny flat OR the garage is a granny flat, none of them are registered and the council does nothing

    • brad1-8tsi on 25/09/2023 - 08:18

      Council might not care but the ATO want to know where that extra $250/week is coming from and what all these new tax deductions are that you are making

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