Granny Flats used to be literally that: a small dwelling on the back of your property which housed an aging parent, or was sublet to generate a bit of extra income for the family.
These days, it’s all about increasing the yield of your investment property, and property magazines seem full of ads wanting to help you add one.
While you can’t claim depreciation on your owner-occupied property – you can depreciate your Granny Flat if it is an income-producing asset. Items like appliances, carpet, hot water unit and air-conditioning can all be depreciated at the same rate as any investment property.
We have recently prepared some depreciation reports on granny flats that cost approximately $100,000 to build. The depreciation claim in the 1st year worked out to be around $7,000 and over the first 10 years…nearly $35,000.
A Granny Flat might not be for everyone. Some owners might prefer to install a pool, or just like having a big block of land for the kids to play in. But if you are considering a Granny Flat, make it a good one. After all – it could you in there one day!
Tyron Hyde is a director of quantity surveying firm Washington Brown. For more QS Corner tips and information on property depreciation including a FREE online tax depreciation calculator, visit www.washingtonbrown.com.au
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Disclaimer: while due care is taken, the viewpoints expressed by contributors do not necessarily reflect the opinions of Your Investment Property.