Will I lose my pension?
While Granny Flats are no longer just for grannies, some of our clients do come to us at a stage of their life when they are receiving a part or full age pension.
Customers who are in this position often decide, along with their children or relatives, that a Granny Flat will bring benefits for everyone.
However, most customers in this position are concerned about how they can build a Granny Flat to live in, without losing some or all of their age pension payments. Our sales team are trained to give you clear general advice on this topic.
The good news
Most customers in this situation walk away with a solid plan to build a Granny Flat while keeping their age pension entitlements intact.
When you build a Granny Flat on your child’s property, or on the property of another relative or friend, you are entering into an agreement for them to allow you to live on that property for the rest of your life or until such time as you choose to no longer live there.
It’s wise to get a simple legal document in place to set the boundaries around this agreement. Again, our sales team are trained to point you in the direction of a reputable solicitor who can draw up such an agreement at a reasonable price – after all, we are mindful that you are managing on a pension!
When you build a Granny Flat on a property for which another person has the Title Deed, you are effectively “gifting” the cost of the Granny Flat to this person.
The laws about gifting in Australia are largely misunderstood and often thought to incur a tax. This is not essentially true. Tax on gifted amounts are triggered for the person RECEIVING the gifted amount if it significantly increases their annual income amount.
Fortunately, our prices mean the chances of the gifted amount inflating your child or relative’s income to a point at which it triggers a tax is remote.
More importantly, if you are already receiving an age pension, the gift amount given to build the Granny Flat will deplete, not increase, your assets so you have less chance of losing your pension payments.
Even if you are selling your current home, the combined amount of your earnings from the sale minus the Granny Flat build amount will leave you in a position to retain (or possibly increase) your pension amount.
As you will already know, everything related to the age pension is Centrelink related and must run through the proper processes to ensure that people aren’t abusing the age pension system. So be prepared to go through Centrelink’s “reasonableness” test which looks at the amount you are spending on your Granny Flat and therefore gifting to the ultimate owner of the Granny Flat on the property.
We’re here to help
With our team to guide you through these steps, we will have you building your Granny Flat in no time and living happily with family or friends, with financial strains behind you!
Talk to us about securing a stronger future today.
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