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Foreign property investors in New South Wales (NSW) have received positive news as Revenue NSW has eliminated the foreign owner surcharge land tax and surcharge purchaser duty. This change is effective immediately, and refunds will be backdated to 1 January 2021.
Let’s take a closer look.
NO MORE SURCHARGE PURCHASER DUTY FOR CITIZENS FROM DESIGNATED COUNTRIES
Previously, non-residents purchasing residential properties in certain Australian states, such as NSW, were required to pay an additional surcharge purchaser duty. In NSW, this duty amounted to 8% of the property’s value.
However, Revenue NSW has decided that these surcharge provisions conflict with international tax treaties ratified by the Federal Government, including treaties with New Zealand, Finland, Germany, and South Africa. Therefore, citizens from these countries who purchase residential properties will no longer be obligated to pay NSW foreign owner surcharge duty or foreign owner land tax surcharges.
On 29 May, Revenue NSW has also identified four additional countries, namely India, Japan, Norway, and Switzerland, as having international tax treaties with the Federal Government. Individuals from these countries are now exempt from the surcharge as well.
The refund period for purchasers, transferees, and landowners from these countries who have already paid surcharge duty or surcharge land tax has been extended to include transactions from 1 January 2021.
APPLICATION FOR REFUNDS
Revenue NSW will proactively identify eligible customers and transactions for the removal of surcharge taxes. If a transaction is identified, a representative from Revenue NSW will contact the relevant person to arrange for the refund.
Individuals who believe they may be eligible for a refund but have not been contacted can directly reach out to Revenue NSW.
ACTION FROM OTHER STATES
The Victorian State Revenue Office is taking note of these changes in NSW and considering the implications for surcharge taxes in Victoria.
HOW CAN YOU BUY PROPERTY IN AUSTRALIA AS A NON-RESIDENT?
“Can foreigners buy property in Australia?” is one of the most common questions that expats ask. The answer is yes, absolutely. Temporary residence visa holders, bridging visa holders and international students can buy property in Australia.
However, as a non-resident, you will need to submit an application to the Foreign Investment Review Board (FIRB), which evaluates foreigners seeking to purchase or invest in residential properties in Australia. Once your application for a property is approved, here are all the types of dwellings you can purchase.
- A new or near-new dwelling
- An off-the-plan property
- Vacant residential land
Keep in mind that you will need to hold a certain type of visa to be able to purchase an established dwelling. Established dwellings also can not be purchased as investment properties, to rent out or as holiday homes. So if you are looking to purchase or invest in Australian property as a foreigner, brand-new or off-the-plan properties will be a perfect choice.
The necessary details and procedures for obtaining approval can be found here.
OTHER FEES FOR FOREIGNERS BUYING PROPERTY
In addition to the fees and charges that residents pay when purchasing a property, foreign buyers are also required to cover several additional expenses below:
- Application fee for FIRB: generally based on the value of the property you are seeking to purchase.
- Surcharge purchaser duty: an additional duty on top of any transfer duty (exemptions are available for some designated countries from May 2023)
- Annual Vacancy charge: annual vacancy charge if you do not live in the property you purchased or rent it out for at least 183 days (approximately 6 months) of every year
All in all, the removal of the foreign owner surcharge stamp duty is welcome news for foreign property investors and allows you to optimise your property purchases in Australia.
The government’s incentives and support for community engagement in regional areas further enhance the appeal of the property market. Non-residents can make well-informed decisions and benefit from long-term growth, rental income, and a fulfilling lifestyle by considering these factors and conducting thorough research.
At St Trinity, we understand the challenges involved in the purchasing process, and our dedicated team is here to assist you, making the experience smoother and more efficient. Don’t hesitate to contact us at (02) 9099 3412 and take the first step towards turning your property ownership dreams into reality.
