Australia: Consultation on implementation of build-to-rent tax incentives

Tax incentives to encourage investment and construction in the build to rent sector

Tax incentives to encourage investment and construction in the build to rent sector

Treasury released for consultation a draft bill and draft imposition bill that aim to introduce tax incentives to encourage investment and construction in the build‑to‑rent (BTR) sector.

The draft bill, Treasury Laws Amendment (Measures for Consultation) Bill 2024: Build to Rent Developments, seeks to improve incentives for investors to invest in new BTR developments by:

  • Increasing the capital works deduction rate from 2.5% to 4%
  • Reducing the final withholding tax rate on fund payments from eligible managed investment trust investments from 30% to 15%

The imposition bill, Capital Works (Build to Rent Misuse Tax) Bill 2024, would impose a misuse tax when one or both tax concessions are claimed in circumstances when they are not available due to BTR development ineligibility.

According to Treasury, its consultation is seeking views from interested parties on implementation details in the draft legislation, including:

  • Whether a minimum proportion of dwellings should be offered as affordable tenancies
  • The length of time dwellings must be retained under single ownership before being able to be sold (the announcement indicated a 10‑year period)

Treasury has also provided a policy fact sheet in the consultation.

The consultation closes on 22 April 2024.


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