Foreign investor transfer duty surcharge
A 4% stamp duty surcharge will now apply to all purchases of residential real estate by foreign persons, including foreign individuals, corporations, trusts and governments.
This is in addition to normal duty payments on these transactions. So as an example, if a foreign person purchased a residential property for $2 million, the duty payable would be $95,490, plus a 4% surcharge of $80,000, meaning the total payable would be $175,490.
It will not apply to Australian citizens, including those living abroad, and permanent residents living in Australia.
The current concession for residential off-the-plan purchases, which allows for a delay of up to 12 months in the payment of duty, will no longer be available to foreign persons.
Foreign investor land tax surcharge
There will also be a land tax surcharge of 0.75% to holdings of NSW residential land by foreign persons. This will start from the 2017 land tax year and there will be no tax free threshold and no principal place of residence exemption.
The tax surcharge will be additional to normal land tax, which remains unchanged.
For more information, please visit the Office of State Revenue website here.
Charges in other states
These changes bring NSW more into line with two other Australian states.
Victoria’s State Government has proposed a 7% foreign investor surcharge on residential stamp duty from 1 July 2016. This is an increase from the current 3%. It is also expected that the existing 0.5% land tax surcharge will increase to 1.5% from 1 January 2017
Queensland also announced a 3% duty surcharge on the foreign purchase of residential property, from 1 October 2016.