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Balance Retirement & Aged Care Specialists

Granny Flats

A Granny Flat “Interest” or “Right” is where you pay for the right to live in a specific home for life. This option is becoming increasingly more popular as it allows people to delay moving into aged care and may have some amazing financial benefits that come along with it.

A Granny Flat Interest/Right is governed by the Australian Government and is an agreement for accommodation for life. It can affect your eligibility or rate of payment (Pension) and it may be included in your assets test.

To most people a Granny Flat is selling your home and giving someone (usually a family member) all or some of the sale proceeds for them to build a granny flat, or modifying the house to provide granny flat accommodation in their existing home which allows you to move in with them. However, from a Centrelink perspective it is so much more as you don’t have to build a granny flat at all, there are several options and it can have spectacular financial benefits if done correctly.

Regarding a Granny Flat Right the property that you move into must belong to someone else and cannot be in the name of a partner or trusts and companies that you control. The property that you move into can include transferring your home into someone else’s name, buying a house for someone else, building a granny flat on someone else’s property or moving into someone’s home. Normally if someone were to sell their home and buy another home of similar value there would be little or no impact on your pension entitlement. Although if you purchased a new home for smaller value and had money left over there could be a negative impact on your pension entitlement.

This next two parts are the difference between gifting and a Granny Flat Interest/Right and if done correctly allow you to get around the gifting rules if you do it correctly.

  1. If you sell your home and do not purchase another home and you then proceed to give the remaining money to your family, then this particular gifting could have a major negative impact on your pension and the pension could be significantly reduced or lost completely.
  2. If however you gifted the money as a Granny Flat Interest/Right then it would NOT have an impact on your pension at all, but the amount given MUST satisfy certain strict conditions and tight guidelines in order for it to not affect your pension.

At Balance Aged Care Specialists, we can help guide you around your Granny Flat Right options, as this can be financially beneficial if done correctly. We can help navigate the government rules and regulations to guarantee this option works in your financial favour and to show you your financial options if you don’t want to sell a property.

If you are interested in finding out more about the Granny Flat options available to you, you can call 1300 556 287 to speak to a Balance Aged Care Specialists for a free phone consultation or please find some more information by clicking the link below.

Real Life Example

Balance were able to show Edna how she could sell the family home and gift some of the proceeds to her children without it affecting her pension.