Individual property investors will be offered more tax incentives to pour money into low cost housing.
From 1st January 2018, the capital gains tax discount for individuals investing in “affordable” residential property will increase from 50% to 60%.
To qualify for the extra discount, the housing must be provided to “low or moderate” income tenants and the rate of rent being charged must be at a discount to the market rate.
The affordable rental housing must be managed through a registered community housing provider and the investment held for a minimum of three years.
Mercer Financial Advice Leader Richard Ebbs says the scheme could attract certain investors such as those with a socially responsible ethos, but it’s not a simple proposition.
“The extra discount on capital gains is considerable and that might provide added incentive to invest,” Ebbs says, “but like any investment you’ve got to weigh up other factors such as the likely yield, future resale value and whether it complements your other investments.”
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