The Australian Taxation Office has released a notice detailing new incentives for build-to-rent developments to increase the supply of housing and provide certainty for owners and investors on 13 January 2025.
The incentives
Faster Depreciation: The capital works tax deduction rate for new eligible BTR developments will increase from 2.5% to 4%. This change shortens the depreciation period for construction costs from 40 years to 25 years.
Lower Withholding Tax: The withholding tax rate for eligible fund payments from managed investment trusts (MITs) will drop from 30% to 15% for income generated by eligible BTR developments.
Eligibility requirements
A BTR owner must notify us of their choice to access the incentives and meet eligibility criteria over a 15-year compliance period.
If a BTR development fails to meet any of the eligibility criteria in the 15-year period after making the choice, a new misuse tax may apply.
The requirements and how to access the incentives can be found on ATO’s website.
