Tax Benefits/Implications of Building an Auxiliary Unit (Granny Flat) on my PPOR and an Investment

Hello everyone!

I've been doing my tax return this year and come to a tricky question!

I've just spent 2*$5k getting two applications in for granny flats (Logan, QLD, needed to get the DA done by 30th June to avoid the new infrastructure charges). Costs (from memory) included surveyor, plans, DA, engineers etc - all set up by Mark Wilson Design and Build (can recommend!)

I don't plan to actually start building until 2019 however (I have two years apparently).

For the granny flat on the investment, I guess it'd just be a straight deduction? if so, where do I claim it? Or, would it be deductible over a few years? Or, perhaps not deductible, but it forms part of the cost base for CGT? Or, perhaps a mixture of both, depending on the specific item I'm claiming?

For my PPOR, this is where it gets tricky - how do I claim against my PPOR? Since the Granny Flat will take up 50% off the land, can I potentially claim some of the loan interest? If so, how to calculate? Or am I way off and being idealistic lol.

Any creative ideas? I've done a bit of a google search, but not finding a lot so far.

Thanks for your help!

 

The costs are capital expenditure and arent deductible. No creative knowledge needed.

The GF costs form part of its costbase. The main residence exemption is affected and a small % of costs when the property commences to be available for rent may be deductible (eg rates, % of some of the existing loan). Your greater problem is apportioning the original acquisition into two elements:

A. The GF area of land; and
B the balance which includes the main residence and all remaining land.
A reg valuer may need to apportion the original costs etc...This will be used to % split the loan interest for the land adjacent to and under the GF.

That % of loan interest (A) may be deductible from the latter of
1. time the land was set aside and fenced from the main residence for the GF build or
2. Approval

 

Thanks very much for the reply Paul! Awesome