Large granny flats in the Northern Beaches are not unusual as land sizes in certain suburbs tend to be bigger as well. If you have a large tract of land and are thinking of adding a granny flat to your Northern Beaches property, you’ll be glad to know that it can add value to your property. Value, remember, can be more than an anticipated sale price and you might find exceptional value in allowing an elderly relative to live semi-independently, or give your teenager some privacy.
What’s important here is to ensure it does not reduce outdoor space significantly and that it complements – rather than detracts from – the beauty of the main home. If your granny flat greatly reduces the outdoor space or overlooks the main home, it could be seen as a liability when it’s time to sell your Northern Beaches property.
If you need more information about granny flat arrangements and tax implications, you’ll find the information below quite helpful.
Granny flat building is booming on the Northern Beaches
A granny flat is so named as it’s a secondary dwelling built on the same land as a main home, usually built for the purpose of housing an elderly or ageing relative. It’s a self-contained unit with its own entrance, bathroom, kitchen and living space as a minimum.
Aside from being used to house elderly parents or relatives, granny flats can work as guest accommodation. We find that teenage kids also move into a granny flat if they’re old enough to leave their home or want privacy without the need to relocate far away from their parents.
Other property owners rent out their granny flats to students, couples or young families. Granny flats are also popular among Northern Beaches renters who want to live among bushland but can’t afford to rent a house or don’t need the extra space.
Northern Beaches Council: No need for a full DA
As long as your granny flat is considered to be a complying development, you won’t need to submit a full Development application (DA) to council. This makes adding a granny flat an easy solution if you want to have additional living space or a possible income source.
Northern Beaches granny flat: financial implications
If you rent out your granny flat, you can use the rental income for paying your mortgage. But if you do rent it out, you need to be aware of your granny flat’s impact on your income tax.
For example, renting out your granny flat at commercial rates means the rent can be assessed as income on which you need to pay income tax. However, you can also claim normal depreciation deductions as for any investment property.
Also, note that a granny flat cannot be sold on its own. To do this, you would need to subdivide the existing property title. In turn, subdividing your property could lead to a goods and services tax (GST) obligation once the flat is considered a new, separate residential property.
Seek professional advice
For all tax and financial implications, it’s important to seek advice from a tax specialist or your accountant.
Can we help with your granny flat plans?
Planning for a granny flat may be simple enough. However, you need to know exactly what your goal is for building one, as well as the pros and cons.
However, with proper planning, you’ll be able to use your granny flat to your advantage.