Affordable Housing | Am I Eligible for Capital Gains Tax Discount?

A sale made on Australian residential rental property (used for providing affordable housing solutions) may be eligible for up to an additional 10 per cent discount for tax purposes. For example, Capital Gains Tax Discount percentage of 40 per cent will increase up to 50 per cent. With the upcoming tax season of 2021, affordable housing owners are curious about their C.G.T additional 10 per cent discount. Our accounting experts recommend having a complete understanding of your eligibility and lodging your reports before time.

What is Affordable Housing?

According to the Australian Taxation Office (ATO), any unit, house or apartments (dwelling), where the given below conditions are satisfied is classified as affordable housing:

1. Any property that is a residential premise and taxable Australian real property (TARP) available for rent. However, this DOES NOT include caravans, houseboats and mobile homes.
2. Not a commercial residential premise
3. Registered community housing provider exclusively responsible for the occupancy and the management of the tenancy.
4. Entity/ties holding an ownership interest in the dwelling provides a certification showing the housing was used to provide affordable housing.
5. An entity that has no ownership interest and is in receipt of the National Rental Affordability Scheme (NRAS) for the NRAS year.
6. Passing a non-portfolio test where a managed investment trust (M.I.T) has an ownership-based interest and the tenant has no interest M.I.T.

Do I have any eligibility for an affordable housing Capital Gains Tax discount?

As per the Australia Taxation Office, you may be eligible to make a capital gain, when you sell an affordable housing rental property. Also qualifying for an additional up to 10 per cent capital gain discount, if the following conditions provided below are met: In the case of making a capital gain – Made by an Australian resident individual OR Recognized or distributed to the owner, either direct from a trust, MIT or indirectly from trust through an intervened partnership. Must have also provided -

1. Existing or new affordable housing dwelling.
2. Rent price is below the market rent
3. To eligible tenants on low to moderate incomes (based on household consumption and income).
4. For a minimum period of 3 years (or 1095 days) from 1^st January 2018 to continuous or aggregation of three years.

Do I need to provide a Community Housing Provider report?

Community Housing Providers, that issue affordable housing certificates must provide an annual report to notify the Taxation Commissioner, with the details of all certificates during the given income year. As an affordable housing property owner, it Is suggested to keep your CHP annual report organized with a number of certificates issued during the reporting period, intermediary details, provider and investor details. This report is required under the law from 1^st January 2018 and is required to be lodged electronically with ATO. More importantly, if you are due to submit your first annual report, covering the income year 2020 – 2021? Make sure, your CHP report is electronically lodged before 31^st July 2021. Are you a community housing provider? and need support with your annual report and capital gains tax? With over 8 different office locations, our qualified chartered accountants can provide you with expert support for C.G.T concessions. Book an appointment with us on 08 7480 2593 or send us a message.