There are two days left to have your say on the Federal Government’s proposal to provide a targeted capital gains tax (CGT) exemption for granny flat arrangements where there is a formal written agreement in place.
If the proposal goes ahead, it will provide more competition for retirement villages.
Under the measure, CGT will not apply to the creation, variation or termination of a formal written granny flat arrangement providing accommodation for older Australians or people with disabilities.
The Morrison government is committed to measures to keep the elderly at home.
“When faced with a potentially significant CGT liability, families may opt for informal arrangements which can leave open the risk of financial abuse and exploitation, for example, following a family or relationship breakdown,” Treasurer Josh Frydenberg said in October last year.
“CGT consequences are currently an impediment to the creation of formal and legally enforceable granny flat arrangements. When faced with a potentially significant CGT liability, families often opt for informal arrangements, which can lead to financial abuse and exploitation in the event that the family relationship breaks down. This measure will remove the CGT impediments, reducing the risk of abuse to vulnerable Australians,” Federal Government’s The Treasury states.
Federal Government expects the measures to cover around 3.9 million Pensioners – a considerable number of older people. The exemption will not apply to commercial rent arrangements.
Without the ‘penalty’ of increased capital gains when a property is sold, the prospect of building a flat in the backyard to care for Mum or Dad suddenly appears much more attractive.
Granny flats are a small but growing area of seniors’ housing in recent years as adult children look for ways to keep ageing parents out of residential care.
Could this be the tipping point that sways the market in their favour?