Call us now 1300-889-743

Foreign Citizen Stamp Duty

Does it apply to all foreigners and Australian temporary residents?

Foreign citizens who want to buy or invest in residential property in Victoria (VIC), New South Wales (NSW) and Queensland (QLD) will need to pay a surcharge on top of their stamp duty (land transfer duty) and, in some states, land tax.

These changes will or have already come into effect but whether you’ll actually be hit with the extra cost depends on your situation.

The additional land transfer duty doesn’t actually apply to all foreign citizens or even every Australian state and territory so how can you avoid it?

Who does the additional duty apply to?

The land transfer duty surcharge and, in some states, extra land tax only applies to the following types of foreign purchasers and only in the following circumstances.

VIC

NSW

  • You’re buying residential property in the state of NSW. The surcharge doesn’t apply to commercial property.
  • You’re a foreign citizen or temporary resident. This doesn’t apply if you’re an Australian citizen, permanent resident or a New Zealand citizen on a Special Category Visa (subclass 444).
  • You signed the Contract of Sale after 21 June 2016. This is only for the stamp duty surcharge – a land tax surcharge also applies to purchases made from 1 January 2017.
  • Please refer to the NSW Office of State Revenue website for more information.

QLD

  • You’re buying residential property in the state of Qld.
  • You’re a foreign citizen or temporary resident. This doesn’t apply if you’re an Australian citizen, permanent resident or a New Zealand citizen on a Special Category Visa (subclass 444).
  • You signed the Contract of Sale after 1 October 2016.
  • Please refer to the QLD Office of State Revenue website for more information.

This additional duty only applies in Victoria, NSW and Qld!

As yet, all other states and territories don’t apply a stamp duty or land tax surcharge.

Call us on 1300 880 743 (+61 2 9194 1700 if you’re outside Australia) or complete our free assessment form and we can let you know if you know if you qualify for a foreigner mortgage.

You may be able to borrow up to 65% of the property value with some of our lenders!

How much is the extra tax?

VIC

Prior to the additional stamp duty changes that came into effect on 1 July 2015, duty in Victoria was applied on a sliding scale, starting at 1.4 per cent for properties valued at $25,000 and rising to 5.5 per cent for those valued at $960,000 and above.

These rates still apply but the SRO Vic began charging an additional duty of 3% of the property value for contracts signed between 1 July 2015 and 30 June 2016 as well as the normal duty.

Today, a 7% additional land transfer duty applies to all property purchased from 1 July 2016 onwards.

Increased stamp duty is the only surcharge that will apply, although the VIC government’s absentee owner surcharge on Land Tax will increase from 0.5% to 1.5% from 1 January 2017. This is an annual fee based on the value of the land you own in Victoria. Units and houses have a portion of their value which is considered to be land for tax purposes.

NSW

A 4% stamp duty surcharge and a 0.75% land tax surcharge applies.

In addition to this, foreign investors will no longer be entitled to the 12 month deferral for the payment of stamp duty for off the plan purchases of residential property.

QLD

A 3% stamp duty surcharge applies.

How does that stack up in dollar terms?

VIC

For an $800,000 property in Victoria, the normal stamp duty is $43,070.

For foreigners and certain visa holders, your stamp duty now shoots up to $99,070 for the same property. That’s $56,000 more!

NSW

Previously your stamp duty would have been $31,490.

You’re now paying $63,490 which is a $32,000 increase.

QLD

Previously, your stamp duty would have been $21,850.

You’re now paying $45,850 which is a $24,000 increase.

What if I’m buying with my spouse?

If you’re an Australian citizen living and working overseas (an expat) and you want to buy a property with your wife who is a foreign citizen, you won’t be charged the additional land transfer duty.

Even though you’re overseas, you’re exempt from the surcharge because you’re still an Australian citizen and your wife is exempt because she is legally married to you.

Are other states planning to introduce the higher duty?

NSW and QLD are the only two states so far to follow VIC’s lead in introducing a stamp duty and land tax surcharge for foreign purchasers.

It’s unclear whether other states will follow, purely because average property prices in other states are lower: the amount of revenue other states can expect to generate pales in comparison to QLD, NSW and VIC.

Why did NSW, VIC and QLD do this?

When explaining its reason for introducing the higher duty, the Victorian government said that it was only fair that foreign investors pay their fair share to fund government services and infrastructure.

QLD and NSW made similar announcements, with figures of up to $1 billion in revenue-raising being bandied about.

Most foreign investors won’t be fazed by the higher costs of buying a property and investment is still strong.

Do you need a non-resident mortgage?

Are you a foreign citizen, permanent resident, temporary resident or New Zealand citizen in need of a mortgage?

The Australian government has long had a love/hate relationship with foreign investors and rules and regulations for buying real estate change on a regular basis.

This also extends to bank and lender policy, from how much you can borrow to what type of non-residents can actually qualify for a mortgage.

Not all lenders are the same!

We’re experts in non-resident mortgages and can navigate this policy minefield so you have the best chance of qualifying for a mortgage in Australia!

Call us on 1300 889 743 (+61 2 9194 1700 if you’re outside Australia) or fill in our free assessment form to speak with one of our mortgage brokers.