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Australia Build to Rent Tax Incentives Guide

the Australian build to rent tax incentives. The guide covers: the BTR development eligibility (the "qualifying BTR developments") — the "build to rent (the BTR)" development must meet the following criteria to qualify for the tax incentives: (a) the "development must contain at least 50 dwellings" (the "minimum 50 units in the single development"), (b) the "dwellings must be offered for the rent to the general public" (the "residential rental" — not the "short-term holiday rental" or the "student accommodation"), (c) the "development must provide the on-site amenities" (the "25% of the gross floor area for the communal facilities" — the "gym, the pool, the gardens, the common rooms"), (d) the "landlord must retain the ownership for at least 15 years" (the "minimum 15-year holding period" — the "no subdivision or the resale of the individual units"); the managed investment trust (MIT) withholding tax (the "concessional MIT rate for the BTR") — the "managed investment trust (the MIT)" that invests in the "eligible BTR residential housing" can access the "concessional MIT withholding tax rate" of 15% (the "reduced from the standard 30% rate") for the fund payments to the "foreign resident investors"; the concessional rate applies to the "BTR residential housing" that meets the eligibility criteria (the "50 dwelling minimum" and the "15-year holding period"); the CGT discount for the BTR assets (the "capital gains tax treatment") — the BTR landlord who holds the BTR development for at least 15 years may be eligible for the "CGT discount" (the "50% CGT discount for the individuals" and the "33.33% CGT discount for the super funds") on the capital gain from the disposal of the BTR asset; the "15-year holding period" requirement ensures the long-term commitment to the rental housing; the GST treatment (the "GST on the BTR developments") — the BTR development may be eligible for the "GST concession" (the "reduced GST on the supply of the residential rental properties") — the landlord can claim the "input tax credits" for the construction costs and does not charge the GST on the rental income (the "residential rent is the GST-free").

BTR Incentive Eligibility Criteria

• Minimum dwelling requirement: The BTR development must contain at least 50 dwellings (the "units or the apartments") in the single development. The development can be the "single building" or the "multiple buildings within the single complex". The dwellings must be the "residential premises" (the "self-contained units" with the kitchen, the bathroom and the living areas).
• On-site amenities: The BTR development must provide the "on-site communal facilities" occupying at least 25% of the net floor area. The amenities include: the "gym", the "swimming pool", the "common gardens", the "community rooms", the "co-working spaces", the "cinema rooms" and the "barbecue areas".
• 15-year retention: The BTR landlord must retain the ownership of the development for at least 15 years from the "completion of the construction". The landlord cannot subdivide or sell the individual units during the 15-year period. The development may be sold as the "single asset" after the 15-year period.

For the property tax and the CGT for the investment properties, see our Property Tax Guide →.

MIT Concessional Rate for BTR

• MIT structure: The "managed investment trust (the MIT)" is the "collective investment vehicle" commonly used for the large-scale property investments. The MIT that invests in the "eligible BTR housing" can apply the "concessional MIT withholding tax rate" of 15% on the "fund payments" (the "distributions of the rental income") to the "foreign resident investors".
• Application process: The MIT must apply to the ATO for the "concessional MIT withholding rate" for the BTR housing. The application must include: (a) the "development details" (the "number of the dwellings, the address, the completion date"), (b) the "evidence of the BTR eligibility" (the "minimum 50 dwellings, the on-site amenities, the 15-year commitment"), (c) the "fund structure documents".
• Compliance and the review: The ATO may review the BTR MIT compliance annually. The MIT must demonstrate the ongoing compliance with the BTR eligibility criteria. The fund that fails to meet the criteria may lose the concessional rate and be required to pay the "additional withholding tax" at the 30% rate.

For the GST on the property and the rental properties, see our GST Guide →.