Tax Implications for Renting a Granny Flat in NSW

In New South Wales, you can rent out your granny flat to tenants. To be eligible, the accommodation must meet certain standards and regulations.

  • The Australian Taxation Office (ATO) considers renting a granny flat as a taxable income source.
  • You’ll need to complete a tax return and report your rental income on your personal tax assessment.
  • You may also be required to register for Goods and Services Tax (GST) if you earn more than $75,000 per year from renting out the property.
  • The ATO allows a 50% private use exemption for primary residences, but this may not apply if the granny flat is used as a separate dwelling.
  • You’ll need to keep accurate records of rental income and expenses, including rent paid by tenants.

Additional Tax Considerations

  • You may be eligible for depreciation on assets used in the property, such as furniture or appliances.
  • The ATO has specific rules regarding capital gains tax (CGT) when selling a granny flat.