Forman Financial Services

Budget 2023 Other

Housing (build-to-rent developments) – accelerating tax deductions and reducing managed investment trust withholding tax rate

From Budget night

The government has announced, for eligible new build-to-rent projects where construction commences after 7:30pm (Sydney time) on 9 May 2023 (Budget night), it will:

• increase the rate for the capital works tax deduction (depreciation) from 2.5 per cent to 4 per cent per year
• reduce the final withholding tax rate on eligible fund payments from managed investment trusts (MITs) attributed to newly constructed build-to-rent developments from 30 per cent to 15 per cent.

This measure will apply to build-to-rent projects consisting of 50 or more apartments or dwellings made available for rent to the general public. The dwellings must be retained under single ownership for at least 10 years before being able to be sold and landlords must offer a lease term of at least 3 years for each dwelling.

The reduced managed investment trust withholding tax rate for residential build-to-rent will apply from 1 July 2024.

Consultation will be undertaken on implementation details, including any minimum proportion of dwellings being offered as affordable tenancies and the length of time dwellings must be retained under single ownership.


Expand the eligibility of the Home Guarantee Scheme

The government has announced it will expand the eligibility of the Home Guarantee Scheme to:
• allow two eligible people to be joint applicants for a guarantee beyond spouses and de facto partners
• allow non-first home buyers who have not owned a property in Australia for at least 10 years to access the First Home Guarantee and Regional Home Guarantee
• allow a single legal guardian of children to access the Family Home Guarantee
• allow Australian permanent residents to access the Scheme.

The Home Guarantee Scheme includes:
• The First Home Guarantee – supports eligible first home buyers to buy their first home sooner, with a deposit as little as 5%.
• The Regional First Home Buyer Guarantee – to support eligible regional first home buyers to buy a home in a regional area.
• The Family Home Guarantee – to support eligible single parents with at least one dependent child to buy a home, with a deposit as little as 2%.

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Disclaimer and Warning
The information above is of a general nature only.  It should not be used as a source to make financial decisions.  It’s also important to note that the legislation and figures related to this topic tend to change regularly and therefore the information above may not reflect the current status.  We recommend that if you are looking for advice on this matter, you should contact us.

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