Who is classified as a foreign property purchaser?
A foreign purchaser is a person who is not an Australian citizen, a person who does not have Australian permanent residency, a foreign corporation or a trustee of a foreign trust. New Zealand citizens with a special category visa (Subclass 444) are classified as permanent residents if they are in the country at the time of settlement.
Additional stamp duty for foreign property purchasers
Foreign property purchasers may be liable to pay additional stamp duty on the share of the property they acquire. This is calculated on the dutiable value of the foreign purchaser’s interest in the property before any concessions are applied.
For contracts, transactions, agreements and arrangements entered into on or after:
- 1 July 2015 but before 1 July 2016 (even if the settlement date is on or after 1 July 2016), the additional duty rate is 3%
- 1 July 2016, the additional duty rate is 7%
- 1 July 2019, the additional duty rate is 8%
Stamp duty exemptions and concessions available to foreign property purchasers
Principal place of residence concession (PPR)
Stamp duty concessions and exemptions will only apply to the land transfer duty amount and do no affect the calculation of foreign purchaser additional duty as outlined above. Additional duty is calculated on the dutiable value of the foreign purchaser’s interest in the property before applying any concessions.
From 14 June 2018 foreign purchasers who are eligible for the PPR concession may also be eligible for an exemption from additional duty. To be eligible for the PPR concession they must:
- Buy the property with their spouse or partner who is an Australian citizen, a permanent resident or a New Zealand citizen holding a special category visa.
- Meet the residency requirement for the home (i.e. live in the property as their Principal Place of Residence for a continuous period of 12 months starting within 12 months of being entitled to possession of the property)
If a foreign purchaser is unable to meet this requirement, then the foreign purchaser may be liable for additional stamp duty on their share of the property.
First Home Owner Concession (FHOC)
Similar to the PPR concession, foreign purchasers may qualify for the FHOC if they buy the property by meeting the above two (2) criteria:
- Buy the property with their spouse or partner who is an Australian citizen, a permanent resident or a New Zealand citizen holding a special category visa.
- Meet the residency requirement for the home (i.e. live in the property as their Principal Place of Residence for a continuous period of 12 months starting within 12 months of being entitled to possession of the property)
If a foreign purchaser is unable to meet this requirement, then the foreign purchaser may be liable for additional stamp duty on their share of the property.
For all further questions and inquiries on foreign property purchasers and relevant stamp duty concessions/exemptions contact our office on (03) 8590 8370.
This update does not constitute legal advice and should not be relied upon as such. It is intended only to provide a summary and general overview on matters of interest and it is not intended to be comprehensive. You should seek legal or other professional advice before acting or relying on any of the content.
Last updated: 17 May 2020 Article by: Halil Gokler
