Eligible land will receive an exemption of up to 50 per cent of the taxable value of the land for 20 consecutive assessment years from the first year the development meets the requirements.
The exemption only applies for assessments years beginning on or after 1 July 2023.
A development meets the requirements to receive an exemption as a build-to-rent development if:
- the land containing the development is owned by the same owner or group of owners and managed by one management entity
- the development has been constructed or substantially renovated for the purpose of providing at least 40 self-contained dwellings for lease under a residential tenancy agreement
- the dwellings in the development are able to be lawfully occupied between
12 May 2022 and 30 June 2032 and become occupiable within five years of each other - the dwellings are available to rent for a term of at least three years, although residents can choose a shorter lease term and
- the dwellings are not restricted to certain classes of person unless it is necessary to ensure public health or safety, if the dwellings are social housing, or in prescribed circumstances.
Complete the application form available at the bottom of this page.
Submit the form and supporting documents when the 40th dwelling is available for lease.
Land ownership
Show moreIf the land containing the development is owned by a group of owners:
- while each owner must have an interest in all the land, their interests need not be equal and
- no owner of the land, either individually or with another owner, can be entitled to a specific part of the land to which one or more other co-owners are not entitled.
If A owns 30 dwellings, B owns 10 dwellings and C owns 10 dwellings, they do not own the development jointly and are not eligible for the exemption. However, if A holds a 60 per cent interest in the whole of the land, B holds a 30 per cent interest and C holds a 10 per cent interest, they do own the land jointly and may be eligible for the exemption.
A managing entity does not need to be the owner of the land. The entity may subcontract services to different subcontractors (gardening, general maintenance, plumbing, etc.) but there can only be one managing entity for the development.
Occupation of the dwellings
Show moreA dwelling is generally able to be lawfully occupied when an occupancy permit is granted under the Building Act 2011. The Commissioner may also consider other relevant information, such as a building certificate, to determine if a dwelling is lawfully able to be occupied.
A build-to-rent development containing 40 dwellings begins construction in January 2023. The first dwelling in the development becomes lawfully occupiable on 1 August 2024. To qualify for the exemption, the final dwelling in the development must become lawfully occupiable by 31 July 2029.
Exclusions
Show moreLand partially used for a build-to-rent development
The exemption only applies to the part of the lot or parcel containing the build-to-rent development. The following land would not be considered part of the development:
- vacant land or land used for commercial, professional, industrial, mixed development or other residential purposes
- land which has been cleared for the purpose of development
- land used for prescribed purposes and
- land the Commissioner considers is not used for the purposes of the build-to-rent development.
Mixed use developments
If parts of a build-to-rent development are not used for build-to-rent purposes (such as owner-occupied homes, shops or restaurants), the exemption percentage is reduced based on the proportion of the floor area not used for build-to-rent purposes.
Half of a building’s floor area is used for build-to-rent dwellings and half is used for commercial activities. The exemption is reduced by half (to 25 per cent of the taxable value).
The following are not included when calculating the floor area for the purposes of identifying the percentage used for non-build-to-rent purposes:
- gyms, dining areas, pools and other areas only accessible to tenants of the development (including non-build-to-rent tenants)
- carparks
- storage areas
- stairwells
- lift towers
- cooling towers
- machinery or plant rooms
- air conditioning or ventilation ducts or
- any other prescribed part of a building.
Twenty-five per cent of a building’s floor area is used as a carpark, 10 per cent is used for a gym and recreational area for the development’s tenants, and the remaining floor area is used for build-to-rent dwellings. The exemption is not reduced.
Strata or community titled development
Show moreIf a build-to-rent development is strata or community titled, the exemption applies to all dwellings that are strata or community titled within the development. Any additional dwellings, such as those owned by other individuals, are not part of the development for the purposes of this exemption.
Commissioner’s discretion to exempt a development
Show moreSee Commissioner’s Practice LT 24 for information about when the Commissioner of State Revenue will apply discretion to exempt land that no longer meets the requirements of a build-to-rent development.
Expanding the development
Show moreIf a build-to-rent development is expanded after the exemption has been applied, the Commissioner will apply a further exemption if:
- the build-to-rent dwellings are contained within a different building on the same lot or parcel of land and
- the new dwellings meet the eligibility criteria for a build-to-rent development and
- a new exemption application is made for the expansion.
Retrospective land tax
Show moreIf land ceases to qualify for the exemption during the first 15 years of it being applied, the Commissioner will retrospectively apply tax for the years the land received the exemption.
If land becomes ineligible for the exemption after the 15th year of being exempt, it will no longer be entitled to the exemption but retrospective land tax will not be applied.
Retrospective land tax
A build-to-rent development first receives the exemption in the 2023-24 assessment year. The development must continue to satisfy the exemption requirements until and including the 2037-38 assessment year.
If the development ceased to qualify for the exemption in January 2030, the land will not receive the exemption from the 2030-31 assessment year onwards because it did not meet the exemption requirements on 30 June 2030.
Land tax will be retrospectively assessed for the assessment years in which the land received the exemption (2023-24 to 2029-30).
Reduction in retrospective land tax
1. Exemption is applied
A build-to-rent development receives the exemption in the 2024-25 assessment year.
During this time, 30 per cent of the land is used for a park. However, as the park is not excluded land, the whole development parcel receives the exemption.
The taxable value of the land is $5,000,000.
The exemption reduces the taxable value of the land by 50 per cent to $2,500,000. for the 2024-25 assessment year, land tax (including Metropolitan Region Improvement Tax) of $24,630 is assessed.
2. Change in land use
Before 30 June 2025, the park is cleared to begin construction on a commercial development. The 30 per cent of the land which has been cleared is now excluded land for the purposes of the exemption.
This portion of the land will not receive the exemption from the 2025-26 assessment year onwards because it was excluded land on 30 June 2025. Land tax will be retrospectively reassessed for this part of the land for the 2024-25 assessment year.
3. Retrospective land tax
The retrospective land tax is charged for the 30 per cent of the land as if it is the only land owned by its owner.
The taxable value of this portion of the land is 30 per cent of the land’s unimproved value:
= 0.3 x 5,000,000
= 1,500,000
Land tax payable on a taxable value of $1,500,000 is $7,930.
However, land tax already paid for this part of the land is deducted from the tax assessed.
4. Land tax already paid
The portion of land tax already paid for the 2024-25 assessment year that applies to the ex-park land is also calculated as if the owner only owned that land.
During the 2024-25 assessment year the value of the ex-park land ($1,500,000) was reduced by 50 per cent due to the exemption:
= 0.5 x 1,500,000
= $750,000
Land tax of $1,755 applies to the ex-park land assessed on a single ownership basis. This amount will be deducted from the total retrospective land tax assessed.
5. Total retrospective land tax
The total retrospective land tax payable for the ex-park land is $6,175 ($7,930 minus the land tax already paid of $1,755).
