Increase in CGT discount for affordable housing investments
The Government has announced that there will be an increase to the CGT discount from 50% to 60% for resident individuals who invest in qualifying affordable housing.
Affordable housing investments
The existing 50% CGT discount can be accessed by resident individuals and trusts who hold assets for longer than 12 months. There is currently no added incentive for investors to invest in affordable housing.
In order for resident individuals to qualify for the increased discount, the following conditions must be met:
- The housing must be provided to low to moderate income tenants
- Rent must be charged at a discount below the private rental market
- The affordable housing must be managed through a registered community housing provider
- The investment must be held for a minimum of three years.
The 60% CGT discount will also be available to resident individuals investing in affordable housing via managed investment trusts.
After much speculation around the CGT discount and whether it would be reduced or even eliminated entirely, it seems the Government has bamboozled us all and taken the opposite approach by increasing the discount for affordable housing investments. Although this sounds good in theory, the Government still has some work to do around the edges to clarify the definitions of low to moderate income, and what will qualify as rent charged below market rate.