Foreign investors to endure doubled taxes as NSW supports the 'Australian dream'

By on
NSW Urban development
A building (C) owned by Morgan Stanley's Australian real estate unit Investa Property Group can be seen in central Sydney, Australia, July 28, 2015. Reuters/David Gray

Foreign buyers are expected to endure higher fees and taxes under the NSW government’s proposed changes aimed at raising billions of dollars to assist first-home buyers. The Foreign Investor Surcharge Duty will reportedly rise to 8 percent from 4 percent while the annual land tax surcharge on foreign investors will increase from 0.75 to 2 percent annually.

Premier Gladys Berejiklian and her Treasurer Dominic Perrottet are due to make formal announcements about the new measures. The changes are slated to come into effect starting July 1.

Perrottet previously hinted at changes to back up first-home buyers, stressing that the great Australian dream is to own a home. “While foreign investment brings an important flow of capital into NSW, my priority is to ensure Australians have that opportunity first,” she said.

Over the next four years, about $2 billion is expected to be generated from the changes. The amount will be used to fund the reintroduction of first-home buyer stamp duty concessions on existing homes.

The threshold on stamp duty concessions for existing homes will likely rise up to $750,000. That is more than the current threshold that currently stands for buying new homes up to $650,000.

The Daily Telegraph understands that the Berejiklian government can reintroduce concessions five years after former premier Barry O’Farrell whacked stamp duty exemptions on existing homes for first-home buyers. The concession was left for newly constructed homes. The news outlet also reports that the government is taking into account whether to elevate the threshold at which immunity for newly constructed homes comes in.

The measures Perrottet are about to introduce are reportedly tougher than any other state on foreign buyers. Victoria has a 7 percent residential stamp duty surcharge and 1.5 percent land tax surcharge for foreign buyers.

The new 8 percent stamp duty surcharge tops the 7 percent normal transfer duty. Therefore, foreign buyers will be accountable for 14.5 percent of the total purchase price of the most costly properties.

Based on the most recent property investment data, one in every 10 buyers in New South Wales is a non-Australian. The FIS has obtained $150 million from at least 3000 foreign investors since it was launched in the 2016-17 Budget.

In Hong Kong and Singapore, governments are charging 15 percent in stamp duties on foreign investors in residential real estate. Foreign investors are also facing 15 percent foreign buyer transfer taxes in Canadian provinces British Columbia and Ontario.

Read More: 

More Australian households worse off under federal govt's plan to raise Medicare levy: ANU

Top Australian universities to get $200m research booster from UK-based IP Group

The Young Turks/YouTube