Energy-efficient rental updates to attract tax write-off under new proposal
In an effort to lower energy costs for renters and contribute to reducing the use of fossil fuels, a federal MP has proposed granting landlords an instant tax write-off to implement energy upgrades.
Independent MP from Sydney’s inner-east, Allegra Spender, is championing the effort, which has been cosigned by eight other members of Parliament as well as ACT senator David Pocock.
The initiative would provide property investors with write-offs for installing heat pumps, induction cooktops, and energy-efficient reverse-cycle space heating.
By Ms Spender’s calculations, this could save the average landlord $422 over five years when buying a heat pump, $189 on an induction cooktop, and $293 to $1,422 on energy-efficient reverse-cycle space heating.
She has suggested that the tax break should be available for a limited time, prior to the introduction of minimum energy performance standards for rental properties.
The plan has received the thumbs up from the Real Estate Institute of Australia (REIA) president Hayden Groves, who described it as a “practical solution in the task of making properties more energy efficient”.
“The Australian real estate industry, through our rental portfolios, has a combined $3 trillion in rental properties under management,” Mr Groves said.
“Practical incentives that help investors implement small energy upgrades make absolute sense and would benefit both the investor and renter, as well as lift energy efficiency standards across the whole housing stock,” he added.
Mr Groves went further, suggesting the initiative could be considered permanent.
“Calls for an instant tax write-off for family investors to implement small energy efficiency upgrades should absolutely be supported by government in the long term and not simply as a short-term measure as suggested by the crossbench.”
In Mr Groves’ opinion, this initiative takes the right approach by looking at ways to incentivise landlords, rather than increasing regulation on the sector.
“Engaging property managers and family investors in this transformation is critically important for the success of this program and will yield benefits for renters in particular,” he said.
Current modelling suggests the change would cost the budget less than $50 million each year initially, then decline over time.
Additionally, Ms Spender has proposed another tax code change to reduce the administrative barriers facing apartment owners looking to reduce their power bills with rooftop solar. In this adjustment, body corporates would pay tax on the income generated when solar is exported to the grid, transferring that duty from the unit owners in a strata scheme who currently must calculate and report their individual shares of export income.
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