Since 2016, the Office of State Revenue imposed a 4% stamp duty surcharge on foreign residents. Then as a result of the 2017 Budget, for agreements entered into on or after 1 July 2017, the surcharge rate has increased from 4% to 8%. The surcharge is in addition to the regular stamp duty payable on the purchase of residential property in NSW. So how does this affect you if you’re a non-resident of Australia?
When is the Stamp Duty applicable?
The stamp duty surcharge on foreign residents is payable at the same time that ordinary stamp duty (applicable to all) is payable when real estate is acquired. The foreign stamp duty surcharge must be paid with the original stamp duty within 3 months from the contract date (date of exchange). However, from a practical standpoint, it must be paid by completion of the contract so that a stamped transfer can be lodged for registration.
How is a foreign person defined?
A foreign individual is not ordinarily a resident in Australia. Which means they are the following;
- Permanent visa holders, New Zealand citizens who hold a special category visa, partner visa holders who do not meet the 200 day rule (refer to meaning of 200 day rule below)
- Temporary visa holders, which hold visas which are subject to limitation
What is the 200 day rule?
Persons who reside in Australia for 200 or more days in a 12 month period. So, for example a person moves to Australia on 1 January 2017 and lives in Australia for 200 days prior to exchange and their visa has no expiry date (e.g. not limited by time). The 200 day rule has now added a second exemption if the permanent resident declares that they will use the property as their principal place of residence for at least 200 days after the date of purchase (settlement). To find out more, click here.
Does the foreign stamp duty affect you? If so, don’t let this deter you from purchasing property in the Sydney market. Commercial property is another alternative to get you into the Sydney property market. Commercial real estate is property which is non-residential and is used for business purposes. The space can be commercial office space, retail and industrial. Depending on your strategy, with guidance by Rose & Jones, we can assist in the search and acquisition of commercial real estate to help build your property portfolio in the Australian market which meet your objectives.