Last updated: 29 July 2026
2026-27 Budget · Rental
Build-to-rent: no new tax changes in the 2026-27 Budget
The 2026-27 Federal Budget made no new announcement on build-to-rent (BTR) taxation. The existing concessions that support institutional BTR developments – a 15% MIT withholding rate and a 4% p.a. capital works deduction, both legislated in December 2024 and effective from 1 July 2024 – simply continue. Commonwealth Rent Assistance also wasn't increased in this Budget; it remains at the higher rate set by two rises in 2023 and 2024, with ordinary CPI indexation continuing on top.
Legislative status
BTR tax concessions: existing law, unchanged by the 2026-27 Budget (Treasury Laws Amendment (Build to Rent) Bill 2024, Royal Assent 10 December 2024). Commonwealth Rent Assistance: existing rate, unchanged by the 2026-27 Budget; next CPI indexation due 20 September 2026.
What 'build-to-rent' actually is
BTR projects are purpose-built apartment buildings held long-term by a single institutional owner. Tenants get longer leases and more professional management; owners get a steadier yield than mum-and-dad landlords typically target. It's the dominant model for new urban rental supply in much of Europe, the UK and the US.
In Australia, BTR development has been hampered historically by tax and structuring differences relative to ordinary residential investment. Commonwealth measures legislated at the end of 2024 – the cut in the BTR managed investment trust withholding rate and the higher capital works deduction – addressed those gaps. The 2026-27 Budget simply keeps them in place; it does not add new conditions or change the rates.
Renters: what else the Budget does
- Commonwealth Rent Assistance rose 15% in September 2023 and 10% in September 2024 – the first back-to-back increases in more than 30 years, per Treasury – plus regular CPI indexation. The 2026-27 Budget adds no further rise. Around 1.4 million Australians receive CRA.
- Continued work with states under A Better Deal for Renters to harmonise and strengthen renters' rights.
- Pilot of the Consumer Data Right and Digital ID to improve rental application security and reduce friction for renters.
- $59.4 million over four years for Community Housing Providers to supplement rental income for over 4,000 young people aged 16-24 at risk of homelessness.
Will rents fall, rise, or stay the same?
Treasury's modelling in Box 4.4 of Statement 4 is candid: the negative gearing and CGT changes will lift rents by less than $2 per week for a median-rent household. The dominant rental policy lever remains CRA – which lifted recipient incomes materially via the 2023 and 2024 increases, though not further in this Budget – plus the supply measures (the Local Infrastructure Fund and the ongoing BTR tax settings) that should put downward pressure on rents over time.
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Frequently asked questions
What is build-to-rent?
Build-to-rent (BTR) is purpose-built rental housing developed and held by institutional investors, who rent out the dwellings rather than selling them off as individual lots. It's a major rental supply model in Europe and North America that is still small in Australia.
Did the Budget create new build-to-rent tax breaks?
No. The 2026-27 Budget made no new build-to-rent announcement. The existing BTR tax measures – legislated via the Treasury Laws Amendment (Build to Rent) Bill 2024, passed both Houses 29 November 2024, Royal Assent 10 December 2024 – continue unchanged into 2026-27.
What are the actual BTR tax settings?
A managed investment trust (MIT) withholding tax rate of 15% (cut from 30%, effective 1 July 2024) on eligible fund payments, and a capital works deduction rate of 4% per year (up from 2.5%). To qualify, a development needs at least 50 dwellings under single ownership, available for rent to the general public, minimum 5-year lease terms offered to tenants, and a 15-year compliance period with a misuse-tax clawback if it stops qualifying.
Is rent going up because of the Budget?
Treasury modelling estimates the negative gearing and CGT reforms will lift rents by less than $2 per week for a median-rent household. Commonwealth Rent Assistance itself wasn't increased in this Budget – it rose 15% in September 2023 and 10% in September 2024, and the Budget continues that higher rate with regular CPI indexation, but adds no further rise.
Source: Budget Paper No. 1, Statement 1 (page 15) and Statement 4 (Box 4.4), Australian Treasury, 12 May 2026.
Disclaimer: This information is general in nature and does not constitute financial, legal, or tax advice. Calculations are estimates only and may not reflect your exact circumstances. Eligibility criteria and dollar amounts may change without notice. Always verify with the relevant government authority, your mortgage broker, or a licensed financial adviser before making decisions.