This new Federal Government initiative will prove a boon to residential property investors and low income renters alike.
The scheme provides for a tax free rebate of $8,000 per dwelling per year for up to 10 years for new rental accommodation of 20% below market rent for the particular area. The net effect will be between $5,000 and $6,000 per annum tax free per dwelling on top of normal net income.
Developers need to obtain accreditation for each development of more than 20 dwellings. Round 2 accreditations close on 27 March 2009.
It is anticipated that the scheme will kick-start the residential property investment market, which has been in the doldrums since 2003 when sharply escalating house prices reduced rental yields, even though rents were rising during that time.