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Last updated 25 May 2022

Find out what's new or any changes in legislation that need to be taken into consideration for 2022.

CGT exemption for granny flat arrangements

From 1 July 2021 no CGT event arises to eligible individuals on certain granny flat arrangements if the arrangement satisfies the requirements of the provisions. A granny flat arrangement is a written agreement that gives an eligible person the right to occupy a property for life.

The CGT exemption will apply to the creation, variation or termination of a granny flat arrangement.

An arrangement is a granny flat arrangement if:

A granny flat interest is where an individual has a right to occupy a property for life under a granny flat arrangement. A granny flat interest can be held in any type of property, provided it is a dwelling. This includes the owner's main residence or a separate property. It is not restricted to what is commonly referred to as a 'granny flat'. The interest may be in part or all of the property.

A granny flat arrangement can be entered into between the property owner or owners and any eligible party (meaning family or friends). At the time the eligible party entered into the arrangement they must either:

For more information, see Granny flat arrangements and CGT.

Continue to: Part A – About capital gains tax