A Quick Guide to Depreciation Claims on Granny Flats and Tax Depreciation

Granny flats are a kind of secondary residence on your property premises that you can rent out based on your convenience and preference. They can be thought of as an extension having almost all the features of an apartment or flat. The only difference is that such a unit is not bought by you in a separate apartment but exists there itself in your own property vicinities. The positive side of having such a flat ready for rent purpose is that you can have your eyes on it at all times and can also enjoy the benefits of Tax depreciation. Usually, people chose to build such granny flats towards the backside of their house so that your privacy and convenience is not restricted even if you plan to use it as a property rental.

What should a granny flat contain?

A granny flat should have the basic requirements of a small apartment such as a one-bedroom, drawing room, kitchen, and bathroom. Granny flats are usually rented out to the elderly people though that is not the only purpose in which you can use your property.

Granny flat tax exemptions

If you have purchased or built a granny flat, then you can look forward to some considerable tax deductions. The deductions may depend on leasing the flat or using it for your own residence, but yes the benefits are worth having one. You may be required to pay CGT taxes if you use a granny flat for generating some income by renting it, but the same stands as void when the apartment is occupied by a relative and rent-free. In either way, owning a granny flat can help you in some considerable ways for claiming depreciation for residential rental property. It enhances capital improvement by hiking the value of your investment and also soars the income-producing capability.

How to claim deductions on a granny flat?

While buying a granny flat, make sure that you ask the seller about the claims that you can make on the granny flats. Just because that property is on your own land doesn’t make things different while claiming tax exemptions and deductions.

The granny flats are more like a secondary dwelling space and thus at first should be able to generate income for being eligible for claiming investment property depreciation schedule ATO. Being in possession of a granny flat and being able to scoop some profits out of it makes you qualify for depreciation for capital work which is inclusive of all sorts of wear and tear that occurs on the property. One can also claim for plant and equipment depreciation while owning a granny flat.

Here are a few things on which you can request a tax dispensation:

  • Alarm systems
  • Ceiling fans
  • Air conditioners
  • Hot water system
  • Electrical fittings
  • Pumps
  • Curtain blinds
  • Pool patio
  • Bathroom fittings, etc.

Wrapping up:

Buying or constructing granny flats on your own property can bring in a whole bundle of chances to apply for tax depreciation. Thus it can be taken as one of the best high yielding and beneficial ideas to invest in a granny flat. Also, you can call in for the quantity surveyors to help you out with the depreciation schedule planning to make the most out of it.