NSW Budget 2016: Foreign property buyers in NSW to be hit with stamp duty and land tax hikes
Stamp duty will be doubled for foreign buyers of a median priced Sydney house under changes to be introduced in next week’s NSW budget.
Based on the Sydney median house price of $995,804, the stamp duty bill for a foreign investor will increase by almost $40,000 – from $40,305 to $80,137.
If they are buying a unit at Sydney’s median price, $656,000, they will pay an extra $26,240 in stamp duty.
It follows the announcement by NSW Treasurer Gladys Berejiklian that foreign buyers of residential property will be slugged with a 4 per cent stamp duty surcharge from next week and pay an extra 0.75 per cent land tax from 2017.
The stamp duty surcharge will apply from the June 21 state budget, while the land tax surcharge will take effect from January 1, 2017.
The surcharges will not apply to Australian citizens, permanent residents of Australia or New Zealanders who have stayed in Australia at least 200 days in the last 12 months.
The definition of foreign person will be that in the federal Foreign Acquisitions and Takeovers Act.
Fairfax Media had foreshadowed the possibility of the moves after Ms Berejiklian refused to rule them out after similar surcharges were increased for foreign buyers in Victoria in April.
Victorian Treasurer Tim Pallas increased its existing stamp duty surcharge from 3 per cent to 7 per cent and a land tax surcharge for “absentee owners” from 0.5 per cent to 1.5 per cent.
Ms Berejiklian said the NSW stamp duty and land tax measures are expected to raise $1 billion for the government over the next four years.
However, she said it is expected the surcharges would not deter foreign investors, placing a question over whether they will improve housing affordability, particularly in Sydney.
“These new measures will ensure NSW’s property market continues to be an attractive destination for international investors while making sure that we are able to fund vital services into the future,” Ms Berejiklian said.
“The Victorian experience has demonstrated the measures have not had an adverse impact on the property market”.
Unlike in Victoria, in NSW the surcharges will only apply to residential property.
But the Property Council of Australia slammed the move, noting it meant NSW would join Victoria and Queensland in “imposing surcharges on foreign investment”.
“We’ve now got a race to the bottom on populist taxes that do nothing to fix housing supply or improve affordability,” said property council chief of policy and housing, Glenn Byres.
“Let’s call this for what it is – a cash grab from states prepared to play to the crowd on foreign investment and put at risk Australia’s reputation on the global stage.”
Mr Byres said the government was “introducing a bad tax at a bad time and inflicting damage on the housing construction industry”.