4.6.4.70 Granny Flats - Additional Features

Summary

This topic discusses:

  • what to do where there is more than one granny flat interest,
  • whether the EC is an asset,
  • using the proceeds of sale of the principal home to create granny flat interest,
  • leaving a granny flat interest, and
  • granny flat interests created before 22 August 1990.

More than one life interest or right to accommodation

An income support recipient may pay for more than one life interest or right to accommodation. If the total amount paid is NO MORE than the reasonableness test amount, there is NO deprivation.

Example: An income support recipient sells their home and distributes the proceeds between their children. In return the income support recipient has a right to accommodation with each of them. The income support recipient intends to move around and spend an equal amount of time with each child.

An income support recipient pays for more than one life interest or right to accommodation. The total amount paid is MORE than the reasonableness test amount. The principal home is the home the income support recipient lives in for the most amount of time. The amounts paid for the other life interests or rights to accommodation ARE a gift.

Exception: If the income support recipient spends equal amounts of time in each 'granny flat interest' property, treat the most expensive granny flat interest as the principal home.

Entry contribution

The value of the granny flat interest is called the EC. If the EC is more than the EAA then the granny flat resident is a homeowner. The EC IS an asset for a non-homeowner.

Proceeds of sale of the principal home

If an income support recipient sells their principal home and intends to apply all or part of the proceeds to establishing a granny flat interest, the proceeds from the sale MAY be exempt under the 12 month exemption provisions, or up to 24 months, in certain circumstances, under the extended exemption provisions. RA may be payable.

The following table summarises the assessment of principal home sale proceeds where the person intends to establish a granny flat interest.

If the income support recipient intends to apply all or part of the sale proceeds to establish a granny flat interest that is… Then the income support recipient is a… And RA…
MORE than the EAA, homeowner and the 12 month, or up to 24 month exemption of those proceeds applies, may be payable during the exemption period.
LESS than the EAA, NON-homeowner from the date the home is sold and NO exemption applies, MAY be payable.

Policy reference: SS Guide 4.6.3.80 Exempting the Principal Home - Sale Proceeds (from 01/07/2007), 3.8.1.100 Ineligible Homeowners & RA

Vacating the granny flat

If an income support recipient stops living in a granny flat interest property less than 5 years after creating the interest AND the reason they left would have been anticipated at the time the interest was created the deprivation rules apply.

The deprivation rules would not apply where the reason for leaving is unforeseen. This could include, but is not limited to:

  • sudden onset of illness,
  • family relationship breakdown,
  • elder abuse, or
  • a natural disaster or damage to the property that leaves the property uninhabitable.

Granny flat interest created before 22 August 1990

An income support recipient who established a granny flat interest before 22 August 1990 IS a non-homeowner.

Act reference: SSAct section 12A(2) A person has a granny flat interest…

Policy reference: SS Guide 2.2.3 Verifying Financial Information

Last reviewed: 6 November 2017