Buying Property in NSW as a Foreign Person? The 9% Stamp Duty Surcharge Explained

Picture this. You’ve found the place. The harbour glimpse, the renovated kitchen, the suburb your mates keep raving about. You’ve budgeted for the deposit, the legal fees, the normal stamp duty. And then your conveyancer mentions, almost as an afterthought, an extra 9% of the purchase price payable to Revenue NSW because you’re a “foreign person”.

On a $1 million property, that surcharge alone is $90,000. On top of the ordinary stamp duty. It’s one of the nastiest surprises in Australian property, and it catches people who’d never dream of calling themselves “foreign”. So let’s work through exactly who pays NSW’s surcharge purchaser duty, who’s exempt, and the traps that snare expats.

This article digs into the NSW stamp duty surcharge specifically. If you want the broader picture, including the annual land tax surcharge for foreign owners and how Victoria compares, see our companion piece on Foreign Owner Land Tax Surcharge for VIC and NSW.

What the surcharge is, and what it costs now

Surcharge purchaser duty has been around since 2016. It’s an extra slug of stamp duty that foreign persons pay when they buy residential-related property in NSW, calculated on the dutiable value (broadly, the greater of the purchase price or the property’s value) and charged on top of the ordinary transfer duty everyone pays.

The rate has marched upward: it started at 4%, rose to 8%, and from 1 January 2025 it sits at 9%. That makes NSW the most expensive state in the country for foreign buyers, ahead of Victoria and Queensland. It applies only to residential property, not commercial, and it’s a one-off hit at purchase (distinct from the separate annual surcharge land tax you’d then pay every year you hold the place, which is a story for the companion article).

The big question: are you a “foreign person”?

This is where citizenship and tax residency part ways and trip everyone up. Whether you pay turns on whether you’re a “foreign person” under the rules, and an Australian passport isn’t automatically a free pass if you’ve been living overseas.

An individual is a foreign person unless they’re an Australian citizen, or they qualify as “ordinarily resident” in Australia. And here’s the test that catches expats: being ordinarily resident broadly requires that you’ve actually been physically in Australia for at least 200 days in the 12 months before you sign, and that your presence isn’t subject to any time limit under the migration rules. So an Australian permanent resident who has been living abroad and hasn’t clocked up those 200 days can find themselves treated as a foreign person, surcharge and all.

It’s not just people. A company or a trust can also be a foreign person if a foreign interest (broadly, a 20% or more substantial interest held by foreign individuals, corporations or governments) sits behind it. This is a notorious trap for family discretionary trusts: if even one potential beneficiary could be a foreign person, the whole trust can be treated as foreign. If you’re buying through a trust structure, get the deed checked before you sign, not after.

Who’s exempt

You’re generally not hit with the surcharge if you’re an Australian citizen, full stop. Beyond that, the main exemptions are:

New Zealand citizens holding a Special Category Visa (subclass 444) who have been in Australia for at least 200 days in the 12 months before the contract date. Permanent residents (and certain partner visa holders, subclasses 309 and 820, who Revenue NSW treats like permanent residents) who meet that same 200-day test. And permanent residents who haven’t yet clocked the 200 days but who satisfy the Chief Commissioner that they’ll use and occupy the property as their principal place of residence for a continuous 200 days within the first year, the so-called residence requirement.

Note what’s changed since older guides were written: the 457 visa they all mention no longer exists; it was scrapped in 2018 and replaced by other temporary skilled visas. And the key point about temporary visas hasn’t changed: most temporary, work, student, visitor and bridging visa holders remain foreign persons for this surcharge until they get permanent residency. The 200-day rule is strict, too, and Revenue NSW has made clear there’s no discretion to waive it if you simply fall short.

The treaty exemption that vanished

Here’s a development that caught a lot of buyers (and advisers) off guard, so it’s worth knowing even though it sounds technical.

For a window between early 2023 and April 2024, Revenue NSW accepted that citizens of certain countries with tax treaties with Australia were exempt from the surcharge, because those treaties were thought to override the state law. The countries included New Zealand, Finland, Germany, India, Japan, Norway, South Africa and Switzerland.

That door has since slammed shut. Because the treaties operate as federal law, the Commonwealth changed the federal law (via the Treasury Laws Amendment (Foreign Investment) Act 2024) to remove the conflict, and from 8 April 2024 citizens of those countries are no longer exempt on that basis. Contracts signed before that date may still benefit, but anyone relying on a treaty exemption today, or reading older advice suggesting one exists, is working from a map that’s been redrawn.

Off-the-plan purchases: a timing concession

One area where foreign buyers get a small concession is off-the-plan purchases. In broad terms, where a foreign purchaser buys off the plan and genuinely intends to live in the property as their principal place of residence, the timing of the surcharge liability can be deferred (up to 12 months) rather than payable upfront. The catch is the residence requirement: you have to actually move in and live there for the required period, and if you don’t, the deferred duty becomes payable with interest and penalties backdated to the agreement. So it’s a concession for genuine owner-occupiers, not a loophole for investors.

A word on those “worked examples” you’ll see online

Be wary of the eye-watering stamp duty figures floating around older articles. Some quote surcharge totals that exceed the value of the property itself, which is simply wrong and usually the result of garbled maths. The reality is bad enough without the scare numbers: 9% of the dutiable value, on top of ordinary transfer duty, with a premium rate applying to very high-value homes. On a genuine $1 million purchase, the surcharge component is $90,000. Use Revenue NSW’s own calculator, or get a proper estimate from your conveyancer or us, rather than trusting a number from a blog.

The bottom line

NSW’s surcharge purchaser duty is now 9% of the dutiable value, the highest foreign buyer surcharge in the country, and it’s payable on top of ordinary stamp duty. Whether it hits you turns on whether you’re a “foreign person”, which depends on residency and the strict 200-day test, not on your citizenship alone. The old treaty exemptions are gone, temporary visa holders are generally caught, and trust structures are a quiet trap. Work out your status before you fall in love with a property, because $90,000 is a lot to discover at the conveyancer’s desk.

Tread your own path. Just confirm whether the taxman thinks it’s a “foreign” path first.

Not sure if you’ll be hit with the surcharge? Let’s check before you sign.

Whether you’re a “foreign person”, whether you meet the 200-day test, whether your trust structure triggers it, and whether any exemption applies are all questions worth answering before you commit, because the difference can be tens of thousands of dollars. State surcharges also interact with the federal capital gains and withholding rules when you eventually sell, so the full picture is rarely simple.

Our specialist expatriate tax team can assess your residency and surcharge position and map out the most tax-effective approach, working remotely with Aussies and expats all over the world.

Book an appointment with our expat tax specialists today, ideally before you sign a contract. Your future self, and your hip pocket, will thank you.

General information only. This article doesn’t consider your personal circumstances and isn’t tax, financial or legal advice. State surcharge rules change frequently and stamp duty is administered by Revenue NSW. Speak to our specialist expatriate tax team today, a NSW conveyancer or solicitor, or another registered tax agent, before acting.

References

1. Revenue NSW, “Surcharge purchaser duty” (overview, the foreign person definition and the surcharge applying to residential-related property): revenue.nsw.gov.au
2. Revenue NSW, “Surcharge purchaser duty guide” (the 200-day ordinarily resident test, exempt permanent resident and residence requirement rules, and partner visa treatment): revenue.nsw.gov.au
3. Revenue NSW, “Surcharge purchaser duty and surcharge land tax: international tax treaties” (removal of treaty-based exemptions from 8 April 2024 for citizens of New Zealand, Finland, Germany, India, Japan, Norway, South Africa and Switzerland): revenue.nsw.gov.au
4. Treasury Laws Amendment (Foreign Investment) Act 2024 (Cth) (the federal amendment confirming state foreign-purchaser surcharges prevail over inconsistent tax treaties, effective 8 April 2024): legislation.gov.au
5. Duties Act 1997 (NSW), Chapter 2A (surcharge purchaser duty): legislation.nsw.gov.au