According to The Australian Financial Review, Labor’s revamp of foreign investment rules designed to boost support for much-needed rental housing has been welcomed by the property industry, as it also warns that current tax settings remain a barrier to offshore capital.
Under the new rules announced by Treasurer Jim Chalmers, a long-standing prohibition on foreign ownership of established housing would no longer apply to foreign investors wishing to acquire existing build-to-rent housing. The largest hurdle remains the imposition of a 30 per cent withholding tax on the managed investment trusts through which offshore players typically hold BTR assets they have developed in Australia. The government has promised to halve that tax, bringing it in line with the tax rate applied to other forms of foreign-owned commercial property. However, draft legislation released last month setting out the eligibility for the tax reduction includes a requirement that 10 per cent of the dwellings in a build-to-rent project be offered as affordable tenancies. Cedar Pacific chief executive Bernie Armstrong said lengthy FIRB approval processing times was just one of the challenges in bringing in foreign capital. The others were the very high taxes and surcharges imposed on foreign investors and uncertainty around taxation investment rules. https://www.afr.com/property/residential/firb-changes-are-fine-but-please-fix-tax-investors-20240501-p5fo33
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