On 28 April 2023, the Australian Government announced it would provide incentives to increase the supply of housing, by:
- reducing the withholding tax rate for eligible fund payments from managed investment trusts (MIT) attributable to residential build to rent developments from 30% to 15%.
- This measure will apply from 1 July 2024 for income attributable to newly built build to rent developments.
- Currently, foreign residents from an information exchange country are subject to a final MIT withholding tax rate of 30% for income attributable to a residential property, including build to rent developments.
- increasing the capital works tax deduction depreciation rate for eligible new build to rent developments from 2.5% to 4% per year.
- This measure will apply to developments where construction commences after the 2023-24 Budget (9 May 2023) and will shorten the period that construction costs of eligible buildings are depreciated from 40 to 25 years.
In April 2024, the Treasury publicly consulted on the Build to rent tax concessions draft legislationExternal Link.
In June 2024, the government introduced 2 Bills into Parliament to give effect to the incentives:
- Treasury Laws Amendment (Build to Rent) Bill 2024External Link– key provisions for the proposed incentives are in the Bill.
- Capital Works (Build to Rent Misuse Tax) Bill 2024External Link– a new tax will apply if a build to rent development fails the eligibility requirements in the 15 years after the build to rent development commenced. Provisions to give effect to this are in the Bill.
These measures are not yet law.