Granny flat on PPR fro Airbnb. Tax implications

Discussion in 'Airbnb & Short Term Letting' started by krispy, 5th Mar, 2018.

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  1. krispy

    krispy Well-Known Member

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    Hi
    If we were to build a granny flat at the back of our PPR to use as an Airbnb or short term rental what are the tax implications of that ?
    Can we claim depreciation and running costs against income?
    Do we then pay land tax and does capital gains tax then come into play if we sell ? If we stop using it as a rental before 6 years are up does that make a difference with the 6 year PPR ruling.

    Thanks
     
  2. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker Business Plus Member

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    Can't use 6 ur rule if not absent.
    Proportion of property lose main residence exemption.
    Land tax prob exempt in NSW if u living in property
     
  3. krispy

    krispy Well-Known Member

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    Thank you
     
  4. flinderln

    flinderln Active Member

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    Hi PC community

    If I don’t rent out the Granny Flat and leave it vacant, do I need to pay tax?
    Thanks
     
  5. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker Business Plus Member

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    Depends
     
  6. flinderln

    flinderln Active Member

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    On what?
     
  7. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker Business Plus Member

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    heaps

    Is it a granny flat attached to the main residence?
    are you a resident?
    less than 2 hectares
    house income producing
    etc
    etc
     
  8. flinderln

    flinderln Active Member

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    It is not attached and the main building is PRP.
    The total bolck is 700 sqr or less.
    There is no house income.
     
  9. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker Business Plus Member

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    I would say it there is probably no tax consequences to building a granny flat that isn't rented out if the property is not income producing - but check with your tax adviser as not enough info given.
     
  10. Lacrim

    Lacrim Well-Known Member

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    What's the point of this?
     
  11. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker Business Plus Member

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    Children possibly!
    Or a granny
     
  12. geoffw

    geoffw Moderator Staff Member

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    When we built our granny flat, it was suggested to us that it could be occupied by a family member for a period of time before letting it out, I think to avoid the CGT implications. We didn't have any family members to do this.

    The CGT, when we sell, apparently will apply as a percentage of the land area occupied, however it will not be pro rata for the time since it was built. It will apply as if we had built it 20 years ago.
     
  13. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker Business Plus Member

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    Was it a tax agent or lawyer that suggested this? I don't see how this would change the CGT implications if you are renting it out while living in the main house.
     
  14. geoffw

    geoffw Moderator Staff Member

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    I think it was an accountant. The suggestion was that there were family members living in both the main house and the granny flat, as it would then show that the intention for building it was not as a rental.
     
  15. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker Business Plus Member

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    I can't see how the intention even comes into it. It would be like renting a room of your house. CGT would apply, from that date of renting, and be based on a proportionate basis.
     
  16. geoffw

    geoffw Moderator Staff Member

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    Ok thanks Terry.
     
  17. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker Business Plus Member

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    Paul will probably come along in a min with a different view!
     
  18. Lacrim

    Lacrim Well-Known Member

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    Thought the intent was to derive an income...not leave it vacant.