Important Changes To Stamp Duty And Land Tax Surcharges For Foreign Investors
Over the past year, many Australian states have seen an increase in surcharges for foreign investors. The first round of foreign persons duty and land tax surcharges were introduced in the Victorian Government’s 2015 state budget.
Since then, both New South Wales and Queensland have introduced their own distinct foreign investor surcharges, while Victoria has substantially increased their initial surcharge rates.
In June 2016 the NSW Government announced a number of changes affecting stamp duty, including a 4% stamp duty surcharge for all purchases of NSW residential real estate by foreign persons made on or after 21 June 2016. As a result the top marginal duty rate is now 11% for foreign purchasers.
The NSW Government also announced a land tax surcharge of 0.75% on residential land owned by foreign persons, commencing from 1 January 2017.
The above surcharges are in addition to normal payments of duty on NSW property. In this context a foreign person includes all foreign individuals, corporations, trusts and governments.
The Queensland Government introduced a 3% stamp duty surcharge on purchases of residential property by foreign persons made on or after 1 October 2016, resulting in a top marginal duty rate of 8.75%. At this point the Queensland Government is yet to announce the introduction of a land tax surcharge for foreign buyers.
The Victorian stamp duty surcharge increased from 3% to 7% for purchases of residential property by foreigners, effective from 1 July 2016. Consequently the top marginal duty rate for foreign purchases is now 12.5%. The Victorian Government also announced an increase in the land tax surcharge rate, from 0.5% to 1.5%, effective from 1 January 2017.
The various increases in duty and land tax surcharges throughout the states has resulted in more complexity for foreign investors looking to purchase property in Australia. It’s important to note that the definition of ‘foreign persons’ varies between the states. As such, foreign investors need to understand the definition of ‘foreign person’ as it applies in each state to identify whether they will be subject to the surcharges.
Should you have any queries in relation to the above, or investing in Australian property in general, please contact us or call your ESV engagement partner on 02 9283 1666.