KEY TAKE OUTS:
- Foreign buyers who purchase residential property in New South Wales are liable for an additional 8%
- Purchasers from New Zealand, Finland, Germany, India, Japan, Norway, South Africa, and Switzerland may now be subject to surcharge purchaser duty.
- If you are a permanent resident and are not considered “ordinarily resident” in Australia, you may still access an exemption if you live in the property you are purchasing for a minimum of 200 continuous days within 12 months of the date of the Contract.
- Changes to Federal Law in relation to international tax treaties may change surcharge purchaser duty and surcharge land tax duty liabilities for Contracts exchanged in New South Wales on or after 8 April 2024
Surcharge Purchaser Stamp Duty
Due to recent changes in Federal Law relating to international tax treaties between Australia and other countries, previously individual (not a corporation or trustee) purchasers that were exempt from paying purchaser surcharge stamp duty on a residential purchase in New South Wales may now be liable for same as a result.
Surcharge Duty
Foreign buyers who purchase residential property in New South Wales are liable for an additional 8% of the purchase price in surcharge purchaser duty in addition to regular transfer stamp duty liability to NSW Revenue.
For example, if a foreign purchaser entered a Contract to purchase residential property in New South Wales on 8 April 2024, they would be liable for transfer stamp duty in the amount of $39,735.00 and in addition to the transfer stamp duty would be required to pay an additional surcharge purchaser stamp duty at 8% of the purchase price being $80,000. The total duty liability to NSW Revenue would total $119,735.00.
Exemptions
There are exemptions which apply to the purchaser surcharge duty, which if the criteria are met, the additional surcharge duty would not apply. The criteria for exemptions are as follows:
- You are an Australian citizen.
- You are ordinarily resident in Australia.
- You are a New Zealand citizen who holds a special category visa (visa subclass 444) and meet the residency requirements.
- You are an exempt permanent resident.
- You are a holder of a partner (provisional) visa (subclass 309 or 820) and meet the residency requirements.
- You are a holder of a retirement visa (subclass 405 or 410) and meet the residency requirements.
Ordinarily Resident
To be considered “ordinarily resident in Australia”, and therefore possibly exempt from the additional surcharge duty, your stay in Australia must not have a time limit i.e., a permanent resident or holder of a partner visa, and you have been in Australia for at least 200 days within the 12 months before the date of the Contract. You can count the day you enter and/or exit Australia towards the 200 days total required.
Permanent Resident
If you are a permanent resident and are not considered “ordinarily resident” in Australia, you may still access an exemption if you live in the property you are purchasing for a minimum of 200 continuous days within 12 months of the date of the Contract.
Surcharge Land Tax Duty
Due to recent changes in Federal Law relating to international tax treaties between Australia and other countries, previously foreign individual (not a corporation or trustee) who were not subject to surcharge land tax for land owned in New South Wales, may now be liable for same. Surcharge land tax may even be required to be paid if you do not pay land tax.
A person is considered a foreign person unless they are an Australian citizen or have lived in Australia for 200 days or more in the 12 months prior to the taxing date of 31 December and are a permanent resident in Australia.
General and surcharge land tax are charged on the taxable value of all combined land owned by an individual. It is calculated proportionally to ownership and assessed on every parcel of land owned.
Surcharge Land Tax
No tax-free threshold applies it foreign surcharge land tax. The current general land tax rate is 1.6% and the current surcharge rate is 4% from the 2023 land tax year onward. Both the general and surcharge are payable if you are not eligible for an exemption.
There is an online tool available should you wish to identify if you are liable for surcharge land tax duty which can be accessed here.
Exemptions
Certain visa holders are exempt from surcharge land tax on their principal place of residence if they use and occupy the home for a continuous per of 200 days in a given calendar land tax year. The eligible visas are as follows:
- Permanent visa holder
- Partner visa holder (subclass 309 or 820)
- Retirement visa holder (410 and 405)
If you meet the criteria, an exemption must be applied for by 31 March in the relevant tax year.
Commercial Residential
Commercial land does not attract surcharge land tax. However, if the land is residential, but used by a commercial business to provide housing it may also be exempt from surcharge land tax, such as:
- Hotels, motels, and inns
- Hostels and boarding houses
- Student accommodation
- Aged care and other such facilities
- Bed and breakfast accommodation
- Caravan and home parks
- Serviced apartments
There are requirements which the above must meet in order to obtain the exemption which you can confirm by checking here.
Why Choose Coutts Lawyers & Conveyancers?
Navigating the complexities of surcharge purchaser duty and surcharge land tax can be challenging, especially with recent changes in Federal Law. Understanding these obligations and exemptions is crucial for foreign buyers and investors in New South Wales. At Coutts, we are experts in providing expert guidance and support to ensure that you are fully informed and compliant with all legal requirements.
Reach Out for Expert Assistance
If you have any questions or need assistance with your property transactions, our experienced team at Coutts Lawyers & Conveyancers is here to help. Contact us today to schedule a consultation and let us provide you with the legal expertise you need to navigate the ever-changing landscape of property law.
ABOUT KAY VITOGIANNIS:
Kay joined the Coutts team in May 2021 working as a Licensed Conveyancer within our Property & Conveyancing team, based in our Narellan office.
Kay has over 20 years of experience in the Legal industry. She began her journey in CBD Conveyancing firms as a secretary and attained her Advanced Diploma in Conveyancing in December 2010.
For further information please don’t hesitate to contact:
Kay Vitogiannis
Licensed Conveyancer
info@couttslegal.com.au
1300 268 887
This blog is merely general and non specific information on the subject matter and is not and should not be considered or relied on as legal advice. Coutts is not responsible for any cost, expense, loss or liability whatsoever in relation to this blog, including all or any reliance on this blog or use or application of this blog by you.
