Tallyroo.

Your quotes · NSW planning limits

Granny flat cost

Build costs are quotes, so we will not print an average and call it a benchmark. Total your own figures here for a cost per square metre you can hold two builders to — and check the size and site limits, which we read out of the planning instrument rather than off another blog.

Leave the rent at zero if a family member will live there — the tax treatment below is different, and better.

All in

Total project cost

$180,000

$3,000 per square metre — the figure to compare builders on.

What it returns

Rent, per year$23,400
Gross yield on the build13%
Years of gross rent to repay it7.7
How the total is built up

A breakdown of the project cost, adding the builder’s quote, council and certifier fees, site works and service connections, and the driveway, fencing and fit-out to reach the total.

Within the NSW complying-development limits on the figures entered.

Build costs are market quotes and are your own inputs — no average is asserted. Planning limits are quoted from the NSW Housing SEPP 2021 and apply in New South Wales only; every other state has its own instrument. General information only — not legal, planning or tax advice.

Two rules almost every page gets wrong

The size limit is 60m², not a percentage. Section 52(2)(c) of the Housing SEPP 2021 puts the secondary dwelling’s total floor area at no more than 60m², or a greater area only if another planning instrument covering that land allows one. The “greater of 60m² or 10% of the main house” that circulates widely is a rule from a different division of the same policy, and applying it to a granny flat will cost you a redesign.

The 450m² is a standard, not a locked door. It appears in section 53(2)(a), it applies to detached secondary dwellings, and it is non-discretionary — which in planning language means that meeting it prevents the council demanding something more onerous. The policy attaches a note to section 4.15(3) of the Environmental Planning and Assessment Act confirming that consent can still be granted where the standard is not met. A 400m² block is a harder application, not an impossible one.

One rule is genuinely absolute, though: under section 51 you cannot subdivide the lot afterwards. The flat is value added to a single title, permanently.

The CGT exemption is federal — state duty is a separate question

Worth separating before you sign anything, because the two get conflated constantly. The granny flat arrangement exemption described below is a Commonwealth capital gains tax measure administered by the ATO. It says nothing about state transfer duty, which is charged under your own state’s Duties Act and decided by your revenue office.

Whether granting someone a right to occupy for life is a dutiable transaction where you live is a state question, and we have not verified it for any jurisdiction — so this page does not answer it. Ask your conveyancer or your state revenue office before the agreement is signed rather than after. Reading the ATO’s CGT exemption as meaning “no tax of any kind” is the mistake to avoid.

The rent has a capital gains tax price

This is the part the build-cost pages leave out, and it can outweigh a year or two of rent. Once you let the flat commercially, part of your home is producing assessable income, so the main residence exemption no longer covers all of it and that portion is exposed to capital gains tax when you sell.

Housing a family member is treated differently. Where the owners are individuals and there is a written, binding agreement giving someone the right to occupy for life, the ATO treats it as a granny flat arrangement, and since 1 July 2021 no CGT event arises when that arrangement is created, varied or terminated. The condition that decides it is the ATO’s own: the arrangement must not be commercial in nature. Market rent makes it commercial.

Neither outcome is a reason not to build. They are a reason to know which one you are choosing before the slab goes down.

Frequently asked questions

How much does a granny flat cost to build?
It is a builder's quote, not a published rate, so the ranges you see elsewhere trace to nothing in particular. What the tool above does instead is total the four quotes you actually hold — the build, the approval, the site and services, the finishes — and divide by the floor area, so you can compare two builders on cost per square metre rather than on headline price. Site works and service connections are where quotes diverge most.
How big can a granny flat be in NSW?
Section 52(2)(c) of the State Environmental Planning Policy (Housing) 2021 sets the total floor area of a secondary dwelling at no more than 60m², unless another planning instrument covering that land permits a greater area. The widely repeated "greater of 60m² or 10% of the main house" is not what the instrument says — that percentage belongs to a different division of the same policy.
Do I need 450m² of land for a granny flat?
Not as an absolute. The 450m² figure is a non-discretionary development standard under section 53(2)(a), and only for a detached secondary dwelling. The policy's own note points to section 4.15(3) of the Environmental Planning and Assessment Act, which does not prevent consent being granted where a non-discretionary standard is not met. Meeting it stops the council imposing something more onerous; missing it means you are asking for consent on the merits rather than sailing through.
Can I subdivide and sell the granny flat separately?
No. Section 51 is blunt about it: consent must not be granted for the subdivision of a lot on which a secondary dwelling has been built under that Part. The flat adds value to the one title it sits on, and that is the only way the money comes back to you — through rent, through use, or through the sale price of the whole property.
Does the CGT exemption mean I pay no stamp duty either?
No, and they are different taxes under different laws. The granny flat arrangement exemption is federal, administered by the ATO, and concerns capital gains tax. Transfer duty is charged by your state under its own Duties Act. One does not decide the other, and this page does not tell you whether duty applies to granting a right to occupy where you live — that has not been verified for any state here, so ask your revenue office rather than assuming the ATO has settled it.
Is the rent from a granny flat taxed?
Yes, and there is a second cost most build-cost pages never mention. Renting it commercially means part of your home is producing assessable income, so you lose the full main residence exemption on that portion and pay capital gains tax on it when you sell. The rent is worth having — just price the CGT into the decision rather than reading the gross yield above as the whole story.
Is it different if a parent lives there rent-free?
Take the ATO's own example. Sandra builds a flat on her property for her father Garry, and Garry pays her $500,000 towards the build from selling shares. Ordinarily Sandra creating that right to occupy would be CGT event D1 and she would face a tax bill on it — but under the granny flat exemption the event simply does not happen, so she owes nothing. Garry is not so lucky: the ATO is explicit that selling his shares is not exempt, because the sale is not sufficiently related to creating the interest. The exemption covers the arrangement, not everything done to fund it.

Keep tallying

When you sell

Capital gains tax calculator

The bill the rented portion attracts, with the 12-month discount and your marginal rate.

Open calculator →

While you hold

Negative gearing calculator

Rent against interest, rates and depreciation — the real weekly cost of an investment.

Open calculator →

The other option

Subdivision costs

Splitting the block instead — cost per new lot, and the contributions cap.

Open calculator →

Sources

  • Floor area, site area, subdivision and the complying pathway — State Environmental Planning Policy (Housing) 2021, sections 51 to 54, current version for 10 August 2026.
  • The complying-development pathway in plain terms — NSW Planning, secondary dwellings.
  • Granny flat arrangements and the CGT exemption from 1 July 2021, including the “must not be commercial in nature” condition — ATO, last updated 22 June 2026.
  • Build, approval, service and fit-out costs are market quotes with no published schedule, so none is asserted here — they are your inputs.