CGT discount lifted for ‘affordable’ investors

by Miklos Bolza18 Sep 2017
Under newly released draft legislation, investors will be able to take advantage of a 60% capital gains tax (CGT) discount within the affordable housing space.

In a joint statement on Friday (15 September), Treasurer Scott Morrison and Assistant Minister to the Treasurer Michael Sukkar said the measure was “critical” in the government’s comprehensive housing affordability plan for Australians.

“From 1 January 2018, residents investing in eligible affordable housing will be entitled to a capital gains discount of up to 60% if they hold the investment for at least three years, rather than the standard 50% discount,” they said.

The additional 10% will apply if a CGT event occurs to the owners of a residential dwelling which has been used to provide affordable housing for at least three years (1095 days) over one or more time periods.

The government has defined ‘affordable housing’ as that which is a residential premises both certified and exclusively managed by a community housing provider. Owners will not be eligible to receive a National Rental Affordability Scheme (NRAS) incentive such as a tax offset or payment during the NRAS year.

“These affordable housing measures provide an additional incentive to individual and institutional investors to increase the supply of affordable housing by allowing investors … to retain an increased amount of the capital gains they realise from their investments in affordable housing,” the draft legislation reads.

These changes are listed in the Treasury Laws Amendment (Reducing Pressure on Housing Affordability No. 2) Bill 2017 and will amend both the Income Tax Assessment Act 1997 and the Taxation Administration Act 1953.

The Treasury has asked for interested parties to comment on these proposed laws by either email or post. Submissions will be accepted up until 28 September.

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