Granny flat interest
A granny flat interest is an agreement for accommodation for life. It can affect your eligibility or rate of payment and we may include it in your assets test.
What a granny flat interest is
A granny flat interest or right is where you pay for the right to live in a specific home for life. The property must belong to someone else. It's not a description of the type of property. We may also call it a granny flat right. It must be:
- all or part of a private residence
- your principal home
- not owned by you, your partner or a trust or company you control.
The right only lasts for your lifetime. It's not part of your estate when you die.
Which homes can have granny flat interests
You can have a granny flat interest in any kind of property. It doesn't just apply to properties often referred to as granny flats.
Granny flat interests are usually family arrangements providing company and nearby help for older people. They don't have to be for social security purposes.
The interest may include:
- the same building as the owner of the home
- a separate, self-contained building on someone else's land.
You can't have a granny flat interest in a property you legally own. This includes property that you, your partner or a trust or company you control owns.
Creating a granny flat interest
We recommend you get financial and legal advice before you create a granny flat interest.
You create a granny flat interest when you exchange assets, money or both for a right to live in someone's property for life.
For example, you could transfer:
- ownership of your home but keep a lifelong right to live there or in another private property
- assets, including money, in return for a lifelong right to live in a property.
There are 2 ways to have a granny flat interest, either:
- life tenancy – the right to live in the property
- life interest – the right to use and benefit from the property as you wish.
With both kinds you need to be living there.
Proving your granny flat interest
We may accept that you have a granny flat interest even if it's not in writing. However, we recommend you get a legal document drawn up so there's proof of what you agreed to. This can help prevent problems later if things change.
The document should:
- confirm your right to live in the home for life
- say if you've agreed to pay rent or look after any upkeep of the property
- say how the owner will compensate you if they want you to give up your granny flat interest.
Before you create a granny flat interest, call us on your regular payment line. We'll discuss how it could affect your payments.
Page last updated: 6 July 2021
This information was printed 22 September 2021 from https://www.servicesaustralia.gov.au/individuals/topics/granny-flat-interest/27756. It may not include all of the relevant information on this topic. Please consider any relevant site notices at https://www.servicesaustralia.gov.au/individuals/site-notices when using this material.