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Will I Be Charged Extra Stamp Duty As A Temporary Resident?
● A foreigner stamp duty surcharge applies to properties purchased in VIC, NSW and QLD
● It's not yet clear if other states will follow
● Some foreigners and temporary Australian residents may be able to avoid the additional costs
21 February 2017, Sydney, Australia - The Australian government has been forced to turn up the heat on foreign investment and slapping temporary residents with a stamp duty surcharge is the latest addition to their toolbelt.
Victoria (VIC) was the first state to introduce a stamp duty surcharge but, since then, New South Wales (NSW) and Queensland (QLD) have followed suit.
For the time being, surcharges on stamp duty or land transfer duty only apply to these three east coast states.
However, depending on your circumstances, you may still be able to avoid the additional stamp duty.
Stamp duty surcharge in VIC
It applies if:
● You’re a foreign citizen or a temporary resident.
● You signed the Contract of Sale after 1 July 2015.
How much is it?
Prior to the additional stamp duty changes that came into effect on 1 July 2015, duty in Victoria was applied on a sliding scale, starting at 1.4 per cent for properties valued at $25,000 and rising to 5.5 per cent for those valued at $960,000 and above.
These rates still apply but the SRO Vic now charges an additional duty of 3% of the property value for contracts signed between 1 July 2015 and 30 June 2016.
That means a 7% additional land transfer duty applies to all property purchased from 1 July 2016 onwards.
Luckily, a surcharge only applies to stamp duty and not land tax.
The only exception to this is the so-called absentee land tax surcharge which increased from 0.5% to 1.5% on 1 January 2017.
This applies to absentee owners of land.
Case study
For an $800,000 property in Victoria, the normal stamp duty is $43,070.
For foreigners and temporary residents, your stamp duty now shoots up to $99,070 for the same property. That’s $56,000 more!
Be sure to check the State Revenue Office Victoria (SRO Vic) for more information.
Stamp duty surcharge in NSW
A stamp duty surcharge applies if:
● You’re a foreign citizen or a temporary resident.
● You signed the Contract of Sale after 21 June 2016.
In addition to the additional stamp duty, an extra land tax duty applies to purchases made from 1 January 2017.
Neither surcharge applies if you're buying a commercial property such as a retail shop front or office space.
How much is it?
In specific circumstances, a 4% stamp duty surcharge and a 0.75% land tax surcharge applies.
Case study
Previously, stamp duty on a $800,000 property for both Australian citizens and temporary residents would have been $31,490.
Temp residents now have to pay up to $63,490, a $32,000 increase.
It's best to check out the NSW Office of State Revenue website to stay on top of any further changes.
Stamp duty surcharge in QLD
It applies if:
● You’re a foreign citizen or a temporary resident.
● You signed the Contract of Sale after 1 October 2016.
How much is it?
A 3% stamp duty surcharge applies.
Case study
Previously, stamp duty would have been $21,850 for an $800,000 property in QLD.
You’re now paying $45,850 which is a $24,000 increase.
You should refer to the QLD Office of State Revenue website for more information.
How else can I avoid extra stamp duty?
The extra stamp duty or land tax surcharge doesn't apply in the following circumstances:
● You’re an Australian citizen.
● You're an Australian citizen living and working overseas (an Aussie expat).
● You're a permanent resident.
● You're a New Zealand citizen on a Special Category Visa (subclass 444).
● You're buying in the name of your spouse is an Australian citizen or permanent resident.
If these options don't apply to you, the other two solutions are to:
● Purchase in a state that doesn't apply the extra stamp duty surcharge.
● Wait until you become a permanent resident.
Author: homeloanexperts.com.au
About homeloanexperts.com.au
homeloanexperts.com.au is one of Australia’s leading specialist mortgage brokers.
Founded in 2006 by managing director Otto Dargan, the brokerage specialises in no deposit, unusual employment, non-residents and bad credit, as well as first home buyers, investors and discounts for professionals.
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