Build to Rent – Tax Changes Expected to Stimulate Investment
The Federal Government has introduced keenly anticipated changes to tax legislation in an effort to stimulate investment in the Build to Rent (BTR) sector and provide much needed housing in Australia.
The Property Council of Australia recently reported potential for more than 150,000 new build-to-rent homes that could come to the market over the next ten years. Private, institutional and superannuation investors already have their eyes on the sector with many developments underway.
As part of the tax reforms, the Federal Government has announced an increase in the Division 43 Capital Works Deduction rate for BTR assets from 2.5% to 4% pa, where construction begins after 9 May 2023. The positive impact this change is expected to have on cash flow for investors of new BTR assets is significant, and it is essential that investors leverage off this benefit through the preparation of a Tax Depreciation Assessment as soon as the development is complete. Coupled with the allowances on plant and equipment under Division 40, the allowances available for long term owners of BTR properties will be substantial.
Further, as BTR assets have a long-term ownership profile, it is important that the design and quality of the built form are closely scrutinised during the design phase. Doing so will help to minimise both maintenance and capital costs over the life of the asset.
Napier & Blakeley has a strong focus on providing Cost, Risk, and Return solutions for our clients. With over 20 years of experience in the BTR sector, we have a range of services that will assist investors manage Cost and Risk while maximising Returns, particularly in BTR style developments with a long-term ownership profile.
To see some of our past projects and BTR related services, check out the video below and contact our team for advice:
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