Build to rent
From 1 January 2025, owners of eligible build to rent developments may make a choice for their development to access the tax incentives. To make a choice, they must lodge the approved form with the Commissioner.
This measure is now law.
On 28 April 2023, the Australian Government announced tax incentives to increase the supply of housing, by:
- reducing the withholding tax rate for eligible fund payments from managed investment trusts (MIT) attributable to residential active build to rent developments from 30% to 15%.
- This incentive will be open to developments irrespective of when construction commenced.
- From 1 January 2025, foreign residents from an information exchange country are subject to a final MIT withholding tax rate of 15% for income and gains attributable to a residential property, including build to rent developments.
- increasing the capital works tax deduction depreciation rate for active new build to rent developments from 2.5% to 4% per year.
- This incentive is open to developments where construction commenced after 7:30 pm, 9 May 2023 and will shorten the period that construction costs of eligible buildings are depreciated from 40 to 25 years.
For more information, see:
- Treasury Laws Amendment (Responsible Buy Now Pay Later and Other Measures) Act 2024External Link
- Capital Works (Build to Rent Misuse Tax) Act 2024External Link
- Build to rent development tax incentivesExternal Link
- Foreign resident capital gains withholding
From 1 January 2025 the foreign resident capital gains withholdingExternal Link (FRCGW) rate increased to 15% and the threshold was removed. It applies to all individual and non-individual vendors (property sellers) selling or disposing of certain taxable real property.
Australian residents selling property need a clearance certificate to avoid having an amount withheld from the sale price.
Types of property include:
- your home
- investment properties
- vacant land, buildings, residential and commercial property
- mining, quarrying or prospecting rights where they are situated in Australia
- a lease over real property in Australia
- indirect Australian real property (IARP) interests, where the holder has a right to occupy land or buildings on land.
The 15% withholding rate applies to the market value of all property contracts signed on or after 1 January 2025, unless the vendor (property seller):
- is an Australian resident for tax purposes and provides their clearance certificateExternal Link to the purchaser
- is a foreign resident who is eligible to reduce the amount withheld by supplying the purchaser with a variation noticeExternal Link.
If you're an Australian resident and you didn't obtain a clearance certificate, you can claim the amount that was withheld in your tax return. For full instructions, see:
- myTax 2025 Capital gains or losses
- 18 Capital gains 2025 (paper tax return).
Effective life determinations
We have updated how we publish effective life determinations.
The decline in value of a depreciating asset is worked out on the basis of its effective life. You can either make your own estimate of its effective life or use the Commissioner's effective life determinations. For assistance with both, see Effective life of an assetExternal Link.
Continue to: Rental incomeExternal Link or Rental expensesExternal Link
Return to: General guidance for rental property ownersExternal Link