Understanding the Centrelink rules on granny flats

Q. I am considering selling my home and giving the proceeds to my daughter to build a granny flat on her property for me to live in but I'm worried about how this would affect my pension. What are the Centrelink rules around granny flats?

A. Centrelink's rules on granny flats can be complicated. It has two main concerns: first, that you're not depriving yourself of assets and, second, about your status as a home owner.

A person transfers assets to the owner of the granny flat in exchange for the right to live there for the rest of their life. You acquire this right - a "granny flat interest" - rather than owning the property itself.

You can acquire a granny flat interest in several ways but if you pay more than your granny flat interest is worth - even if you're doing a favour for a family member - this can lead to a negative impact on your pension. The amount you pay to secure your granny flat interest also determines your home owner status, whether the amount you paid is an asset, and your entitlement to rent assistance.

For information contact a financial information service officer by visiting humanservices.gov.au/fis or calling 132 300.

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