AUSTRALIAN GOVERNMENT SLAPS MORE TAXES ON FOREIGN PROPERTY INVESTORS
BY Zoe Phoon
The federal government and many Australian states have slapped new taxes on foreign property buyers and investors.
Western Australia is the latest to announce curbs on foreign buyers with a 4% surcharge on all purchases of residential properties by foreigners including individuals, corporations and trusts effective Jan 1, 2019.
The surcharge will be payable in addition to the normal transfer duty on property buys, residential property investment research firm Global Property Guide reported.
Meanwhile, New South Wales (NSW) has doubled its foreign investor stamp duty surcharge to 8% from 4%.
The state now taxes foreign property investors the most, followed by Victoria’s 7% duty surcharge.
In NSW, the effective purchase tax rate for foreign investors is now 13.5% (5.5% duty plus 8% surcharge) and a land tax surcharge of 2%.
And amid complaints of “ghost homes” Down Under, the federal government also announced that foreign owners of residential properties must pay an annual charge if the property is not occupied or available for rent for at least six months in each year.
This charge provides a financial incentive for the foreign owners to make their property available on the rental market if they don’t intend to stay there.
The annual charge will be equivalent to the foreign investment application fee paid at time of application to the Foreign Investment Review Board.
Since the last census five years previously, more than one in 10 homes are unoccupied in Australia.
The number of empty properties has risen 19% in Melbourne and 25% in Sydney.
Foreigners, mainly from China, bought 25% and 16% of the new housing supply in NSW and Victoria respectively in the year through September 2016, according to a Credit Suisse examination of state tax receipts, Global Property Guide added.
Meanwhile, individual Chinese property buyers have had to grapple with China’s increasing enforcement of an annual US$50,000 limit on foreign currency purchases, forcing them to use creative means to get money out of their country to complete property purchases.
Over the past year, China also moved to restrict corporate investment abroad including real estate and hotel deals.
Analysts say China’s curbs on overseas property deals could worsen Australia’s drop-off in new developments in the property market Down Under.