Granny Flat Arrangements

by Jacqui Brauman


Granny flat arrangements can be an interesting estate planning tool.

This is relevant when someone on a pension wants to sell their main property to downsize, but they don’t want their Centrelink pension impacted by changing their assets.

If a pensioner sells their main home, they end up with all this money in the bank. If it was just left as an asset in the bank, it can push them off the pension – this is because your principal place of residence does not get assessed as part of your pension. But once it’s cash in the bank, it does.

granny flat arrangements

So, a granny flat arrangement can be used to reduce the money in the bank so that the pensioner can keep their pension.

Centrelink has some gifting rules, so you can’t just give money away to reduce your assets, so you can keep your pension.

But the granny flat arrangement is an exemption to that rule about gifting.

If you’re going to live with a child or live with a family member, either in their house, and it requires an extension or certain improvements for you to be able to live there, or you’re actually putting another residence in the backyard (like an actual granny flat) … you give the money to the child or the person that you’re moving in with to do those renovations or to put that granny flat in the back. That gift is exempted from the gifting rules with Centrelink.

So, you can reduce your assets by entering into a Granny Flat Arrangement, because what you’re essentially doing is paying your child, or whomever you’re going to be living with, to care for you.

Centrelink has this exemption to encourage people to care for their family members, so the pensioner can stay at home and not burden a care facility.

A granny flat arrangement is a way of reducing your assets to stay on the pension if you sell your primary residence and move in with a child or something like that.

If this is relevant for someone that you know, share this blog with them.

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