land tax surcharge

Land tax surcharge introduced for foreign persons (VIC & NSW)

Victoria and New South Wales have recently introduced a range of land tax surcharges targeting foreign investors, both individual and corporate.

The aim of the surcharges is to reduce the amount of property which is purchased and held by foreign investors, pushing prices up for Australian citizens.

However, the rules may also inadvertently affect some expats living in the country, as the rules state that a ‘foreign person’ applies to anyone who is not a permanent Australian citizen or one who does not hold a permanent residence visa. This is likely to apply to most expats living in the country on a business innovation and investment visa 188.

How will the new land tax surcharge affect you?

There are different rules depending on which state you live in and your residential status, so let’s look at how the new rules may affect you:

Victoria

Foreign persons (anyone who does not hold a permanent residence visa) purchasing residential property in Victoria will have to pay a surcharge of 7% on top of the existing tax surcharge.

Residential property includes:

  • – Land
  • – Vacant land purchased with the intent of constructing a residential building
  • – Land which includes derelict buildings which the owner intends to develop into residential buildings
  • – Land which has been purchased with the aim of developing a mixed site which contains both residential and commercial buildings where the majority of the buildings are residential

The new surcharges have to be paid on top of the existing property tax surcharge for Victoria which currently stands at 1.5%.

New South Wales

A foreign person purchasing residential property in NSW will have to pay a surcharge of 4% in addition to the standard NSW property surcharge of 1.5%. The surcharge applies to all residential property and land purchased for building residential property, including:

  • – A parcel of land purchased with the intent of building a residential property
  • – A parcel of land which contains one or more residential properties
  • – A vacant lot which is zoned for residential use and does not contain any commercial property

Foreign persons will also not be able to benefit from the tax-free threshold which applies to naturalised persons or those holding a permanent residence visa. The additional surcharge is also payable even if the original land has a nil tax assessment under other provisions.

If you are an expat and need help filling in your Australian tax return or you are not sure if you are affected by the new rules, get in touch with one of our team today.

We can help assess your current situation and give advice about the most tax efficient way to go about investing in Australian property. As expats ourselves we have first-hand experience helping residents purchase property and complete their expat tax returns in Australia.

Shane Macfarlane
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Shane Macfarlane

CEO & Founder at Expat Tax Services
Shane's an Australian Chartered Accountant and Australian expat tax specialist who's also an expat himself (based in Asia).Shane's passionate about tax and legitimate tax minimisation, particularly as it relates to Australian expats who are often subject to high rates of tax back home in Australia.Beyond tax and accounting, Shane's an entrepreneur, having devised, created and founded a successful accounting startup, Fifo Workpapers (acquired by accounting software giant, Intuit inc. in 2013)

In short Shane's a tax and software techno-geek, who recognised that Australian expats were unable to obtain the specialist advice and quality service, that they needed from their accountants. Accordingly, Shane founded Expat Tax Services to provide Australian expats with access to specialist, quality advice at fair and reasonable prices (no hourly rates, fees quoted upfront with unlimited support included) . . . receive the support and advice you need without having to take second-mortgage to pay your accountant's bill! Speak to Shane & the team today.
Shane Macfarlane
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