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How you create the interest will determine whether we consider you a homeowner. How you created it also determines whether we include the value of the interest in your assets test. These factors affect your eligibility for payments and how much you can get.
You need to tell us how much you transferred or paid to the owner for your granny flat interest. We use this to assess whether you're a homeowner. We also use this to see if you paid more than the granny flat interest is worth.
We use the amount you transferred or paid to the owner as the value of the granny flat interest.
We won't consider you to have paid more than the granny flat interest is worth if you're:
- transferring the title of your home and keeping a lifetime right to live there or in another property
- paying to build a granny flat on someone else's property
- paying to convert someone else's home to suit your needs and getting a lifetime right to live there
- buying a property in someone else's name and getting a lifetime right to live there.
We use the reasonableness test when you’ve either:
- transferred extra assets
- made a lump sum contribution towards existing accommodation at someone else’s property where no construction or renovations have occurred.
We also use it to see if you've paid more than the interest is worth to work out whether or not you have deprived yourself of assets.
What deprived assets and the reasonableness test are
Another word for deprived assets is gifting. This is where you give away an asset without getting something of at least equal value in return. Read more about gifting.
If you pay more than the cost or value of your interest, the extra amount is a deprived asset.
To assess this, we subtract the value of your granny flat interest from the amount of the assets transferred. We work out the value of your granny flat interest by using the reasonableness test.
For more details contact our Financial Information Service. They can give you information about financial issues.
If you have a financial planner, they can use the Department of Social Services' reasonable value conversion factors test.
Assessing you as a homeowner
We may assess you as a homeowner, even though you don't own the property you have the granny flat interest in. This will depend on the value of the granny flat interest.
Your homeowner status determines:
- if the amount you paid is an asset
- which assets test threshold applies before it affects your rate of payment
- if you might be eligible for Rent Assistance.
Assessing the value of your interest
Non-homeowners have a higher assets test limit than homeowners. The difference between the 2 limits is the extra allowable amount. We compare this to your entry contribution.
Your entry contribution may be the amount you paid for the granny flat interest. If we assessed you under the reasonableness test, it will be either the:
- reasonableness test value of the granny flat interest, if you paid more than your reasonableness test amount
- amount you paid for the granny flat interest, if you paid less than your reasonableness test amount.
If your entry contribution is more than the extra allowable amount, all of the following apply:
- we assess you as a homeowner in the assets test
- we don't include your entry contribution in the assets test
- you can't get Rent Assistance, as you're a homeowner.
If your entry contribution is equal to or less than the extra allowable amount, all of the following apply:
- we assess you as a non-homeowner in the assets test
- we include your entry contribution in the assets test
- you can get Rent Assistance, if you pay a high enough rent.
What happens if you leave the property
If you leave within 5 years, we'll review the granny flat interest.
If the reason for leaving is something you could expect when you created the granny flat interest, the gifting rules will apply.
If the reason for leaving is something that was unexpected, the gifting rules may not apply.
Unexpected reasons may include sudden illness, family relationship breakdown, elder abuse or property damage.
You can be away from the property temporarily during the 5 years for periods up to either:
- 12 months
- 2 years if it's due to loss or damage to the property.
What happens if the property is sold
The owner can't take away your granny flat interest if this happens. They can do one of the following:
- sell it but make your right to live there a condition of sale
- transfer your granny flat interest to another property
give money or assets to you in return for giving up your granny flat interest.