Granny Flat Agreements
For social security purposes, a parent can transfer or sell their home under the granny flat provisions and pay money to their children for a lifetime right or the use of the “granny flat” (the ‘granny flat interest’). Normally the transferred property or funds would be deemed to be a gift and would affect the pension entitlements of the parent.
However, the ‘granny flat’ rules allow for any property transferred or money paid to the parent’s children to be exempt from the usual deeming legislation by Centrelink. The requirements are quite flexible and you do not actually have to build a separate granny flat or a separate residence. As long as there is a designated room or area that allows for the parent’s exclusive occupancy and there is an agreement to support the arrangement, Centrelink will usually approve the arrangement.