Build-to-Rent Managed Investment Trust legislation passed
12/12/2024
The passing of the Build-to-Rent (BTR) Managed Investment Trust (MIT) legislation marks a pivotal moment for the Australian property market, addressing long-standing barriers to foreign investment and encouraging the growth of the BTR sector.
The legislation has passed both houses of parliament and will apply to eligible BTR developments to:
- increase the depreciation rate from 2.5% to 4% for capital works that commenced after 7:30pm 9 May 2023
- reduce the MIT WHT tax rate from 30% to 15% from 1 July 2024 for amounts referable to rental income or capital gains. This will align the MIT WHT rate with commercial property (i.e. office, retail and industrial).
The higher 30% MIT WHT rate was a major impediment to foreign investment in the BTR sector. This legislation should help boost foreign investment in the BTR sector with the PCA announcing that it could deliver 80,000 new homes over the next 10 years.
Key impact of recent amendments
The key points from the recent amendments to the Bill that have been incorporated into the final legislation are:
- It will apply for all eligible BTR developments even if they existed prior to 9 May 2023. This was an important change and ensures that those businesses pioneering BTR have not been left high and dry
- A minimum lease period of 5 years must be offered to tenants (tenants can request shorter periods)
- BTR misuse tax will apply to the entity that owns the BTR development immediately before that development ceased to be an active BTR development ensuring the appropriate owner bears the liability
- The lease terms are to be determined by the Minister by legislative instrument
- The definition of an affordable dwelling will be determined by the Minister by legislative instrument
Key features of legislation
The key features of the BTR MIT legislation are:
Dwelling features
For our original release on the BTR legislation and more details on the various State BTR regimes please click here.
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