A granny flat can be a separate, self-contained dwelling built on someone else's property, a right to accommodation for life, or a life interest in a home that is to be your principal home. You have a granny flat interest if you contributed money or other valuable assets - for example, your previous family home - in exchange for your granny flat, even if it legally belongs to someone else.

If you own or part-own your home you do not have a granny flat interest. The value of a granny flat interest is generally the same as the amount paid for the interest. However, a ‘reasonableness test' may be applied and amounts in excess of what is considered reasonable may be assessed under the gifting rules.

The value of your granny flat interest (Entry Contribution) is used by Centrelink to determine your homeowner status and eligibility to Rent Assistance.

Granny flat interests are often family arrangements and are seldom covered by any contract or agreement. However, this does not decrease their status for the purpose of these rules.