New Property Taxes – Foreign Purchaser Surcharge

July 25, 2017

New Property Taxes – Foreign Purchaser Surcharge

By URY ZHANG

On the 1st of June 2016, an additional 4 percent surcharge purchaser duty applies on the purchase of residential real estate by foreign purchasers. The 4% surcharge is in addition to the existing amount of stamp duty payable on the purchase of residential property which is as follows:Additional 4% surcharge purchaser duty

Foreigners will also no longer be entitled to the 12-month deferral for the payment of stamp duty for off-the-plan purchases of residential property, and must pay the duty within 3 months from exchange of contracts.These changes will be enforced through completing an office of state revenue purchaser declaration by all new purchasers of an interest in land in NSW.For a summary of the Surcharge Purchaser duty, please see the table below.Stamp Duty Changes

Foreign person is defined as:

  • an individual not ordinarily resident in Australia; or
  • a corporation in which an individual not ordinarily resident in Australia, a foreign corporation or a foreign government holds a substantial interest; or
  • a corporation in which 2 or more persons, each of whom is an individual not ordinarily resident in Australia, a foreign corporation or a foreign government, hold an aggregate substantial interest; orthe trustee of a trust in which an individual not ordinarily resident in Australia, a foreign corporation or a foreign government holds a substantial interest; or
  • the trustee of a trust in which 2 or more persons, each of whom is an individual not ordinarily resident in Australia, a foreign corporation or a foreign government, hold an aggregate substantial interest; or
  • a foreign government; or
  • a general partner of a limited partnership where:
    • an individual not ordinarily resident in Australia, a foreign corporation or a foreign government holds at least 20% in the limited partnership, or
    • two or more persons each of whom is an individual not ordinarily resident in Australia, a foreign corporation or a foreign government, hold an aggregate interest of at least 40% in the limited partnership.

This definition does not include an Australian Citizen, irrespective of where they reside.An individual is ordinarily resident in Australia at a particular time if the individual has actually been in Australia during 200 or more days in the period of 12 months immediately preceding that time, and is not (or was not, immediately before their most recent departure from Australia) subject to any limitation as to time for their continued presence in Australia.

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