Land tax discount for build-to-rent developments

Build-to-rent (BTR) developments that meet certain eligibility requirements are entitled to the following land tax benefits for a period of up to 30 years (known as the BTR benefits):

• A land tax concession in the form of a 50% reduction on the taxable value of the land used for the BTR development.
• An exemption from any absentee owner surcharge for the land.

What is a BTR development?

A BTR development is one or more buildings that are constructed or substantially renovated for the purpose of providing multiple dwellings for rent under residential rental agreements.

Is my development eligible for the BTR benefits?

A BTR development will be eligible for the BTR benefits if it provides at least 50 self-contained dwellings that are:

• fixed on the same parcel of land
• owned by one owner or co-owned by a unified ownership structure
• managed by a single entity (unless the dwellings are used to provide affordable or social housing)
• have an occupancy date (i.e. when the dwellings are first suitable for occupancy as evidenced by an occupancy permit) on or after 1 January 2021 and before 1 January 2032
• rented or genuinely offered for rent to the general public under residential rental agreements that meet the required rental terms.

A BTR development that meets the above requirements is known as an eligible BTR development.

BTR benefits are provided to an eligible BTR development for up to 30 years on the condition that it continues to satisfy the eligibility requirements for a continuous period of at least 15 years from its occupancy date.

What are the required rental terms?

Different rules apply before and after 1 January 2026.

Before 1 January 2026

Before 1 January 2026, each dwelling in a BTR development must be:

• rented or available for rent under a residential rental agreement for a fixed term of at least 3 years (but a tenant may elect for a lesser period)
• not subject to any other restrictions except those required to ensure public health and safety or to provide social affordable housing.

If a dwelling is rented under an agreement that was entered into before 1 January 2026 and meets the above rental terms, the dwelling will be taken to satisfy the required rental terms for the entire period of the agreement.

From 1 January 2026

From 1 January 2026, each dwelling in a BTR development must be:

• rented or genuinely offered for rent under a residential rental agreement for a fixed term of not less than 3 years (but a renter may request a lesser term in certain circumstances)
• not subject to any other restrictions except those required to ensure public health and safety or to provide social affordable housing.

A renter may request to enter into a residential rental agreement for a fixed term of any period (unless a regulation is made to prescribe a minimum period). If a renter requests a period of less than 3 years, both the owner of the BTR development and the renter must sign a declaration that the renter was genuinely offered a fixed term of at least 3 years, but the renter themselves requested a lesser term.

The declaration must be in the form determined by the Commissioner of State Revenue and provided to the Commissioner upon request. If the BTR owner does not provide the declaration to the Commissioner upon request, the relevant dwelling will not meet the required rental terms for the period to which the residential rental agreement refers.

However, the Commissioner may determine that the dwelling meets the required rental terms if the Commissioner considers that it is appropriate in the circumstances to disregard the owner's failure to comply with the request. This can occur where the owner has a history of genuinely offering long-term leases and has simply inadvertently breached the requirement to obtain or appropriately file the declaration.

The declaration is under development.

What happens if there is a change in circumstance?

The BTR benefits are provided on the condition that the BTR development satisfies the eligibility requirements for a continuous period of at least 15 years from its occupancy date.

If there is a change in circumstances that results in the land (or part of the land) that receives a BTR benefit ceasing to be eligible for a BTR benefit within its first 15 years, the owner of the land:

• must notify the Commissioner in writing of the change in circumstance, within 30 days of the change
• will be liable for a special land tax known as BTR special land tax. This tax is intended recoup the financial advantage provided to the land by way of the BTR tax benefits for each year that it was eligible.

Frequently asked questions

I have built 2 new town houses that I intend to lease out, will I be entitled to the concessions for a BTR development?

The BTR provisions are directed to new, large-scale developments that comprise at least 50 self-contained dwellings built for long-term rental as part of a BTR development. The measure is not directed to all rental properties.

What does ‘parcel of land’ mean?

This means any land owned by the same person that is contiguous or separated only by a road, railway or other similar area across or around which movement is reasonably possible.

What does a ‘substantially renovated building’ mean?

In the context of the BTR provisions, a substantially renovated building is a building which has been redeveloped from another use for the purpose of providing BTR dwellings and facilities. An example of a substantially renovated building is the conversion of an office building to residential apartments. Substantial renovation is not an update of an existing residential facility.

What does ‘self-contained dwelling’ mean?

This means a residence with a separate entrance which contains all amenities required for a residence, such as kitchen, bedroom and toilet. It must be for the exclusive use of those occupying the dwelling. If the occupiers need to leave the dwelling to gain access to any one of these amenities, the dwelling is not self-contained.

What does ‘unified ownership structure’ mean?

A BTR development must be owned under a single ownership structure. While there can be multiple owners, the co-owners must collectively own the whole BTR development in the same manner.

Can ownership of a BTR development change?

Ownership of a BTR development can change over time, provided the change does not result in divided ownership of any land that forms part of the BTR development.

What does ‘managed by a single entity’ mean?

A BTR development, by definition, must consist of at least 50 dwellings owned by the same owner(s) and leased to third parties. Managing these leases, the common property and any other facilities that comprise the BTR development must be centralised. This means the services must be provided by the owner(s) themselves or, alternatively, outsourced to a single management entity.

What does ‘occupancy date’ mean?

This means the date on which an occupancy permit has been issued in respect of the dwellings that comprise the BTR development. This refers to the occupancy permits for at least 50 dwellings.

A BTR development may have more than one occupancy date. This relates to BTR developments that are completed in stages. For example, a BTR development that delivers 50 dwellings in year 1 and a further 35 in year 4 will have a different occupancy date for the 50 dwellings compared to the 35 dwellings.

Different occupancy dates are relevant for the 15-year obligation to continually operate the BTR development. In the example above, the first 50 dwellings must operate for 15 continuous years commencing from their occupancy date (year 1). The subsequent 35 dwellings must operate for 15 continuous years commencing from their occupancy date (year 4). Importantly, to be eligible for the BTR benefits the BTR development must maintain at least 50 dwellings. Using this example, at least 15 of the first dwellings must continue to operate after their 15-year period to allow the subsequent 35 dwellings to meet their 15-year period, as together they meet the 50-dwelling requirement.

What does ‘suitable for occupancy’ mean?

This is an expression used for individual dwellings. A dwelling is suitable for occupancy on the date that an occupancy permit is issued in respect of that dwelling.

Can dwellings that were completed with the issue of an occupancy permit before 1 January 2021 qualify to be considered part of a BTR development?

No. All dwellings for an eligible BTR development must have been issued with an occupancy permit on or after 1 January 2021.

The dwelling must also be part of a new building or a substantially renovated building.

Can a rental agreement be subject to any restrictions?

Dwellings in a BTR development must be rented or genuinely offered for rent to the general public under a residential rental agreement within the meaning of the Residential Tenancies Act 1997. The agreement must not be subject to any restrictions except for those required to ensure public health and safety or provide social or affordable housing.

A development that restricts who can rent the dwellings will not qualify for BTR benefits. For example, a development used for student accommodation is not an eligible BTR development as leases are restricted to students. 

Do the dwellings have to be leased for a term of at least 3 years?

Prior to 1 January 2026, all dwellings in a BTR development must be rented or available for rent under a residential rental agreement for a fixed term of at least 3 years. However, in recognition that tenants may prefer a shorter term, a tenant may negotiate a lesser rental period.

From 1 January 2026, all dwellings in a BTR development must be rented or genuinely offered for rent under a long-term residential rental agreement of at least 3 years. A renter may request a residential rental agreement of less than 3 years. If they do, both the renter and the owner of the BTR development must sign a declaration that the renter was genuinely offered a fixed term of at least 3 years but the renter chose a residential rental agreement of less than 3 years.

If a BTR owner does not provide the declaration to the Commissioner upon request, the relevant dwelling will not meet the required rental terms for the period to which the residential rental terms refers. However, the Commissioner may determine that the dwelling meets the required rental terms if the Commissioner considers that it is appropriate in the circumstances to disregard the owner's failure to comply with the request. This can occur where the owner has a history of genuinely offering long-term leases and has simply inadvertently breached the requirement to obtain or appropriately file the declaration.

When are the BTR benefits available?

The BTR benefits are available for eligible BTR developments from the 2022 land tax year onwards. An owner of an eligible BTR development must apply to the Commissioner requesting the BTR benefits for the land or part of land used for the BTR development. If approved, the BTR benefits will be applied conditional on the 15-year eligibility requirement being met (a BTR development must operate as an eligible BTR development for at least 15 years from the occupancy date).

Are BTR benefits available during the construction phase?

BTR benefits are not available during the construction phase. The BTR benefits are only available for land used and occupied solely as an eligible BTR development. An eligible BTR development requires at least 50 completed self-contained dwellings, evidenced by the issue of an occupancy permit.

What if land is used for a BTR development and for another purpose?

BTR benefits only apply to land, or part of land, used and occupied solely for a BTR development. Eligible land includes facilities available for use by the residents of the BTR development. Mixed use of land, such as an office building on the same land as a BTR development, will not prevent that part of the land used for the eligible BTR development from accessing the BTR benefits.

Where part of land is used for another purpose, the taxable value of the land is apportioned between the eligible land and the non-eligible part, with the BTR benefits only applied to the eligible part.

What if a BTR development is expanded later?

If an eligible BTR development is expanded at a later date, the BTR benefits will continue to apply to the original development unchanged, provided all eligibility criteria are met.

The BTR benefits may also be available for the expanded section from its occupancy date (i.e. the date an occupancy permit has been issued for the expanded part), provided it meets all eligibility requirements, including that it is completed between 1 January 2021 and 31 December 2031.

The expanded section will not, on its own, need to meet the 50-dwelling requirement. If, taken together with the original section of the eligible BTR development, the minimum dwelling threshold is met, the expanded section will qualify for the BTR benefits.

The 15-year qualifying period for the expanded section of an eligible BTR development will commence from the occupancy date of the new BTR dwellings.

What if the land is subdivided?

If land is subdivided and the BTR development continues to meet the eligibility requirements for the BTR benefits, those benefits will continue. The subdivision of land on its own will not impact the application of the BTR benefits or the 15-year eligibility period.

Can a BTR development be completed in stages and qualify for BTR benefits?

Yes. For land to qualify for BTR benefits, there must be a completed eligible BTR development, which requires at least 50 dwellings.

If stage one of a BTR development completes in 2022 and comprises at least 50 self-contained dwellings that land will qualify, subject to all other eligibility requirements being met. If stage 2 completes in 2023 and is for 35 self-contained dwellings, this land may qualify notwithstanding the stage is for less than 50 dwellings. This is because the stage 2 land can be considered in conjunction with the stage 1 land and the stages are part of one eligible BTR development. On that basis, the BTR development consists of 85 self-contained dwellings.

If the reverse occurred with the 35 dwellings completed in the first stage and 50 additional dwellings completed in the second stage, the 35 dwellings (stage 1) would not qualify. This is because dwellings from different stages cannot be added together to meet the 50 dwelling threshold. Rather, the addition must be made to an existing eligible BTR development, which by definition must have at least 50 dwellings. In this example, provided all other criteria are met, the 50 dwellings completed in the second stage would form their own eligible BTR development, to which future dwellings may be added. However, historical dwellings cannot be added to the newly formed eligible BTR development.

Is there a limit on how many times a BTR development can be expanded?

There is no limit on how many times a BTR development can be expanded. However, if an expansion stage consists of less than 50 dwellings (i.e. the stage cannot be an eligible BTR development on its own) then there must be an existing eligible BTR development to join the stage to so the minimum 50 dwelling requirement is met. Stages that together are less than 50 dwellings cannot form an eligible BTR development.

Can land that ceased being used as an eligible BTR development obtain BTR benefits again later?

No. To be an eligible BTR development the land must be used and occupied continuously as a BTR development from the occupancy date. Where land ceases to be used as a BTR development (e.g. the use changes to student accommodation) the land will no longer qualify for BTR benefits even if the use of the land is subsequently changed back.

Note: if the land ceased being used and occupied exclusively as an eligible BTR development during the 15-year eligibility requirement period, special BTR land tax becomes payable.

What obligations are on the owner of an eligible BTR development?

An owner of land that obtains the BTR benefits is required to continuously use and occupy the land as an eligible BTR development for a minimum 15 years from the occupancy date for the BTR development. The occupancy date is the date the occupancy permit was issued for the subject dwellings (being the date the dwellings were suitable for occupation).

The owner of the land must notify the Commissioner in writing if a change in circumstance occurs that results in land receiving BTR benefits ceasing to be eligible for the BTR benefits, within 30 days of the change. 

Failure to notify the Commissioner about the change in circumstance within 30 days of the change is a notification default for the purposes of the Taxation Administration Act 1997. For details on notification default, please refer to Revenue Ruling TAA-008. It may result in penalty tax being imposed on any land tax payable in respect of the land. For details on penalty tax and interest, please refer to Revenue Ruling TAA-007v5.

What is BTR special land tax?

If there is a change in circumstances that results in land (or part of the land) ceasing to meet the eligibility criteria for the BTR benefits within its first 15 years of eligibility, a one-off tax liability called BTR special land tax will apply to that land (or part of land). 

BTR special land tax is intended to recoup the financial advantage provided to the land by way of the BTR tax benefits for each year that it was eligible. 

Who is liable?

The owner of the land at the time of the change in circumstances will be liable for BTR special land tax. 

How do you calculate BTR special land tax?

BTR special land tax is calculated separately for each year the land received the BTR benefits, using the formula below. The total amount payable is the sum of the tax calculated for each eligible year.  

Special land tax for each year = (T×BR)×(1+IR_t)^yd+1-t

where:

• T = The taxable value of the land in the relevant year.
• BR = The BTR benefit rate, determined at the time of the change in circumstance:

• IR = The applicable interest rate for the relevant year. This is the sum of the bond yield for January in the relevant year plus the corporate bond spread as at 31 December in the preceding year. 
• yd = Number of tax years for which the land was eligible for BTR benefits, on the basis that the BTR benefits are applied on 1 January each year.
• t = Number of tax year, calculated from the first year of eligibility for BTR benefits until the relevant year.

The rate of BTR special land tax is determined based on the circumstances of the owner of the land at the time the land ceased to be eligible for the BTR benefits. For example, if the owner at the time of the change in circumstances is an absentee owner, then absentee owner rate will apply for the purpose of the BTR special land tax calculation.

What is the due date for payment of BTR special land tax?

A notice of assessment will be issued by the Commissioner for BTR special land tax. The due date for payment of BTR special land tax is the due date on the notice of assessment. This must be at least 14 days from the issue of the notice.

Is an owner able to sell an eligible BTR development during the 15-year eligibility period?

An owner of an eligible BTR development can sell an eligible BTR development without it resulting in BTR special land tax. However, the new owner assumes the obligation to complete the 15-year eligibility period. If they fail to do so, the new owner is liable to pay BTR special land tax for the whole period, including the period under previous ownership, that the land enjoyed the BTR benefits.

Is an owner able to sell part of an eligible BTR development without affecting the BTR benefits that the remaining land enjoys?

An owner may sell part of an eligible BTR development without affecting the BTR benefits the remaining land enjoys. However, the remaining land must continue to meet the definition of an eligible BTR development on its own.

Will the BTR benefits be included on property clearance certificates?

Yes. Property clearance certificates issued to prospective purchasers will indicate if the land is receiving BTR benefits.

Do the BTR benefits impact eligibility for other tax exemptions?

No. Eligibility for existing exemptions, such as foreign purchaser additional duty and vacant residential land tax, is not affected by eligibility for BTR benefits.

What happens if a dwelling is temporarily unsuitable for occupancy?

In some cases, one or more dwellings in an eligible BTR development may sometimes be temporarily unsuitable for occupancy – for example, due to a brief refurbishment or fire damage. When this happens, the BTR development may become ineligible for the BTR benefits if the affected dwellings are not rented or genuinely offered for rent under a rental agreement that meets the required rental terms. 

In these circumstances, the Commissioner has a discretion to allow the BTR development to continue to receive the BTR benefits despite the period of ineligibility, if the Commissioner considers that it reasonable in the circumstances to do so.

The Commissioner will not exercise the discretion for a period of ineligibility simply because a dwelling is temporarily unsuitable for occupancy. 

For example, a dwelling may be temporarily unsuitable for occupancy due to fire damage. If the fire damage is minor and can be rectified quickly then exempting the dwelling from the rental term requirements for the time to rectify the damage would be reasonable. However, exempting the dwelling for an extended period would not be reasonable. 

Similarly, refurbishments that result in a dwelling not being offered for rent for an extended period are also unlikely to be considered reasonable. For a refurbishment to be considered reasonable, it should be planned to minimise the period for which the dwelling is not available to be rented and the works should be kept to the minimum needed to refresh the dwelling. The discretion is not intended to apply where significant renovations are being undertaken to the dwelling or to the BTR development.