the adviser logo

Federal government introduces BTR tax incentives

by Charlotte Humphrys10 minute read

To encourage investment in the build-to-rent sector, the Albanese government has introduced legislation that provides tax incentives for developers.

The Albanese Labor Government has announced the introduction of new legislation that will deliver new tax incentives to motivate investment and construction in the build-to-rent (BTR) sector.

The new legislation would increase the capital works deduction rate from 2.5 per cent to 4 per cent per year for eligible BTR developments.

It would also reduce the final withholding tax rate on eligible fund payments from managed investment trust investments for eligible new BTR developments from 30 per cent to 15 per cent.


The bill would also impose a misuse tax in the event that an entity improperly claimed one or both of the tax concessions to “[ensure] the integrity” of the tax concessions.

The tax incentives would be available on BTR projects that consist of 50 or more dwellings or apartments that are made available for rent to the public. The Labor government specified that the dwellings must be held under single ownership for a minimum of 15 years.

To be eligible for the concession, at least 10 per cent of the dwellings in a development project must be available as affordable housing. Projects that started construction following the policy announcement on 9 May 2023 can claim the concession.

The proposed legislation would operate separately from state and territory incentives to support the BTR sector.

In a joint statement from Minister for Housing Julie Collins and federal Treasurer Jim Chalmers, similar models have been successfully used overseas to increase housing supply.

The statement said: “Attracting more investment in housing will support our ambitious national effort to build 1.2 million new, well‑located homes over five years from 1 July 2024. We need to build more homes, more quickly, in all parts of Australia.

“We’re working across Government, and with states and territories to help meet this target.”

In April this year, the Property Council of Australia said that lowering the final withholding tax rate on eligible fund payments from managed investment trust investments to 15 per cent could reportedly result in the construction of 150,000 new apartments by 2033.

The council also said that the reduction of the withholding rate to 10 per cent would further bolster affordable housing.

[Related: Lower tax on BTR could bolster affordable home numbers]

jim chalmers julie collins ta dvvap


You need to be a member to post comments. Become a member for free today!
Read the latest issue of The Adviser magazine!
The Adviser is the number one magazine for Australia's finance and mortgage brokers. The publications delivers news, analysis, business intelligence, sales and marketing strategies, research and key target reports to an audience of professional mortgage and finance brokers
Read more