Build-to-rent taxThe Government recently announced a new tax incentive targeted at build-to-rent developers – and ‘mum and dad’ property investors aren’t happy.

The new bill gives these developers an exemption from the tax deductibility limitations that are placed on most private landlords. Private landlords feel this new regime is unfair, according to Stuff.

However, these build-to-rent developments have some features that make them quite different from the average rental property.

What makes these build-to-rent projects different?

Build-to-rent developments are different to individual rental properties in several important ways, according to the new definition:

  • The development must comprise at least 20 dwellings in one place.
  • These types of rentals must offer tenants leases of at least 10 years. Tenants can break their tenancy agreements at any time, with a 56-day notice.
  • The development must have a single owner. This means individual units cannot be sold; the whole development must be sold as a single entity, so only a small buyer pool will exist.
  • Tenants can personalise their spaces.

Incentivising the construction of long-term rental communities is designed to increase the supply of high-quality dedicated rentals.

Could you take advantage of the new tax regime?

If you are considering a 20-unit development project, and you’re prepared to run the finished project as a long-term rental community, you will reap the benefits of having no limitation on tax deductibility.

For most rental property owners, however, the restrictions will apply. However, you have the advantage of being able to sell your rental at any time.

Questions about rental property tax changes?

If you have any queries about this new tax rule, or about how rental property tax regulations could apply to you, please do get in touch – we’d love to hear from you.