Consider buying a property in Sydney? You would better be prepared to pay a 4% duty surcharge. This new tax rule has been put in place on 21st June, 2016 and applicable to all home purchases in New South Wales, making the state the second in Australia to impose stamp duties on foreign purchasers. In addition, there will also be a 0.75% land tax surcharge on top of the aforesaid stamp duty surcharge from 2017 onwards.
In Melbourne of Victoria, the prevailing 3% stamp duty has been increased to 7% since 1st July, 2016. Purchasers from Mainland China have made up bulk of the foreign buying population, and property prices have been doubled in Sydney and risen around 60% in Victoria since 2009. Current property taxes amounted at A$40,490 for an A$1 million property with additional 4.5% surcharge for properties priced above A$1 million.
To rein the relatively significant rise in home prices and preventing local Australian from being priced out of the race, the larger Australian banks have already clamped down on home loans for foreign purchasers. These property curbs are probably to have implications only on those looking to capture short term benefits as they will further eat into diminishing yields that currently stand at an all-time low to 4 percent.
Nevertheless, when looking at other Asia Pacific cities such as Hong Kong and Singapore which have already charged at least 15% tax on foreign property purchasers, the aforesaid recent moves by Australia may not impede real investors who are focusing on long-term goals.
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