Highlights

  • Based on Treasury's exposure draft, homes in an "active build to rent development" would not have their rental losses quarantined.
  • The catch is the definition the draft borrows: a project of at least 50 homes, 10% of them affordable, held by a single owner across a 15-year compliance period.
  • Treasurer Jim Chalmers delivered the second reading speech for the Treasury Laws Amendment (Tax Reform No.
  • The speech does not list each exemption or give a start date for Schedule 5.

The bill carrying the negative gearing exemptions has reached Parliament. Treasury's draft would spare qualifying build-to-rent homes from rental loss quarantining, but only projects meeting the tough 2024 build-to-rent test. The bill carrying the exemptions from Australia's new negative gearing limits reached Parliament this week, and build-to-rent housing is expected to be among them.

What the bill and the draft say

The detail available so far comes from the exposure draft and explanatory material Treasury released on 4 August, with consultation closing on 21 August. Under that draft, a dwelling in an "active build to rent development", as defined in section 43-151(2) of the Income Tax Assessment Act 1997, is exempt from rental loss quarantining. The draft says the exemption applies only for the periods the dwelling is used or held for that purpose. The draft's other exemptions cover NDIS Specialist Disability Accommodation, affordable housing provided through an eligible community housing provider, and public housing leased to government. The draft rules apply from the 2027–28 income year. Whether the introduced bill matches the draft word for word will become clear as the bill and its explanatory memorandum are examined in Parliament.

The limits the exemption sits against

The negative gearing limits themselves are already law under the Treasury Laws Amendment (Tax Reform No. They apply from 1 July 2027 to residential property acquired after 7:30pm AEST on 12 May 2026. For an established dwelling caught by the rules, a rental loss can only offset residential rental income or residential capital gains, with unused amounts carried forward. New builds are excluded, but the "new residential dwelling" definition was always left to later legislation. That is now Schedule 5 of the new bill.

The 50-home, 10% affordable, 15-year test

The "active build to rent development" concept is not new. It comes from the build-to-rent tax concessions that passed Parliament in December 2024. construction must not have started before 7:30pm AEST on 9 May 2023 the development must have at least 50 dwellings available to the public, excluding student accommodation and retirement villages the dwellings must be held by a single owner for the compliance period at least 10% must be affordable tenancies managed by a community housing provider, including at least one of each dwelling type the compliance period is 15 years, with a clawback if conditions are breached Further conditions apply around lease terms and the setting of affordable rents. Sources have described some of these details inconsistently, so they should be checked against the legislation and any related instrument.

What build-to-rent owners already get

The 2024 law gave qualifying projects two concessions. The capital works deduction rose from 2.5% to 4% a year, and the managed investment trust final withholding rate on build-to-rent rent and gains was cut from 30% to 15%. The proposed negative gearing exemption would sit alongside those concessions rather than replace them.