Tax Implications For Building A Granny Flat
With the rising economy, granny flats have been found to be very efficient especially when it comes to acting as an additional source of income. For a property owner who is looking to extend their home and to start earning rental income, a granny flat has been found to be one of the most efficient ways in which they can be able to do so. However, even though it may seem to be an easy process, this kind of additions may come with their implications. There are some different tax implications that you may end up with depending on how you plan to make use of your granny flat build by I Granny Flats Sydney. This is the same thing that applies when it comes to selling your granny flat.
So what is a capital gains tax?
A capital gain tax can best be defined as the difference regarding value between the time in which the investment took place and the time in which the property is sold. There are those assets like personal assets which are usually exempted from this kind of tax.
Understanding the ownership of a granny flat
Whether or not it is an attached granny flat or it is freestanding to the main house, it is important for you to understand that there is no separate ownership when it comes to a granny flat. What this means is that the person who owns the main residence should also be the owner of the granny flat.
What happens is that the price of the granny flat is going to be added to the entire property. Also, there is no way in which a granny flat can be sold by itself. This may only happen only if you have permission from the local planning scheme. However, even though this may occur, the land in which the granny flat has been constructed cannot be subdivided in any way.
Another important point to note is that depending on the state or local council in which you are in; there are a number of permits and regulations that you should be able to meet.
Is your personal property exempted from the capital gains tax?
Even though your family home may be exempted from the capital gains tax, this may not be the case for your granny flat. What usually determines whether your property is going to be exempted or not is how you are going to make use of your granny flat. For example, if you are leasing the granny flat to a relative, then the rental income you may be getting may not be taxable under the capital gains tax. This is mainly because it is going to be classified as a kind of commercial transaction and also the main reason as to why the status of the relationship needs to be looked at.