The current state of play: State and Territory land tax relief for Build-to-Rent (BTR) projects
Given the persistent talk of a housing crisis in Australia, the States and Territories are under pressure to increase housing supply. As both a short term and long-term response, a number of States and Territories have enacted various revenue measures to provide an incentive for developers to undertake BTR projects, and we have set out the land tax relief currently available in the table below. However, with State budgets still to be handed down over the coming months, and the recent announcement by the Federal government about a reduction in the managed investment trust withholding tax rate for newly constructed BTR projects, we expect further incentives and tax reform will be announced to address the issue - watch this space.
Australian Capital Territory
In force: N/A
- There are currently no incentives specific to BTR projects in the ACT, however under the current ACT tax system, a reduced rate of land tax may be achieved where a development has one single title, rather than a title for each unit (i.e. a residential BTR development of a number of dwellings may share one single title where individual units within a residential development are not intended to be individually sold).
- The ACT Government is currently considering further financial incentives and planning changes to encourage appropriate BTR development in the ACT.
New South Wales
In force: From 2021 land tax year until 2040 land tax year
- Eligible BTR properties that commence construction after 1 July 2020 are entitled to a 50% reduction in land value for land tax calculation purposes and exemptions from foreign investor duty and land tax surcharges. This concession will apply until 2040. /li>
- Eligibility requirements are set out in the Treasurer's Guidelines and Revenue Ruling G 014.
In force: N/A
In force: From 1 July 2023 until 30 June 2050
- Eligible BTR projects are entitled to a 50% reduction in land value for land tax calculation for a maximum of 20 years.
- Foreign companies and trustees of foreign trusts which own BTR land will be exempt from the foreign investor land tax surcharge for a maximum of 20 years.
- A full exemption of Additional Foreign Acquirer Duty for acquisitions of land which is to be used to construct eligible BTR projects on or before 30 June 2030.
- A full Additional Foreign Acquirer Duty exemption for acquisitions of land which is already being used for an eligible BTR development.
In force: From 2023-24 financial year until 2039-40 financial year
- A 50% reduction in the land value for land tax calculation purposes will be available where the land is used as an eligible BTR project and where construction commenced after 1 July 2023.
- This concession is contained in the Statutes Amendment (Budget Measures) Bill 2023 which was introduced to the House of Assembly on 15 June 2023, however, is yet to pass.
In force: N/A
- There are media reports which state that Tasmania is considering copying the NSW land tax concession for BTR schemes, however, no government announcement has been made so far.
In force: From 1 January 2022 until 31 December 2031
- A land tax concession, being a 50% reduction in taxable value of the land, is available on land eligible for "BTR benefits" for up to 30 years.
- A full exemption from the Absentee Owner Surcharge is available.
In force: From 1 July 2023
- Eligible BTR properties are entitled to a land tax exemption of 50%. BTR concessions are available with respect to eligible developments for a maximum of 20 years.
- Exemption is applicable to developments which are completed between 12 May 2022 and 1 July 2032.
- This concession is contained in the Land Tax Assessment Amendment (Build-to-Rent) Bill 2023 which was introduced to the Legislative Assembly on 17 May 2023, however, is yet to pass.
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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.