On the purchase of a property, a stamp duty tax is payable on the purchase price payable by the purchaser. Stamp duty is levied at graduated rates as a state tax, and the rates vary between states. Some states also impose a stamp duty surcharge on residential property for foreign buyers. The maximum rates are as per the table below.
City | State | Rate of stamp duty | Surcharge |
| Adelaide | SA | 5.50% over $500,000 | 7% |
| Brisbane | QLD | 5.75% over $1 million | 7% |
| Canberra | ACT | 5.00% over $1.5 million | 0% |
| Darwin | NT | 5.95% over $5 million | 0% |
| Hobart | TAS | 4.50% over $725,000 | 8% |
| Melbourne | VIC | 6.50% over $2 million | 8% |
| Perth | WA | 5.15% over 725,000 | 7% |
| Sydney | NSW | 7.00% over $3.1 million | 8% |
All states of Australia impose land tax on properties other than farming properties and a person’s principal residence.
All states impose land tax on certain types of property with New South Wales, Queensland, ACT and Victoria also imposing surcharges for foreign investors.
Any income derived from renting the property and any profit made on the sale of the property is subject to federal income tax. The rate of tax depends upon who the legal owner of the property is. Companies pay tax at 30 per cent with no further tax payable on remittance of the funds to the overseas investor whereas individuals are taxed at marginal rates which could be as high as 45 per cent.
A foreign investor is required to file an annual tax return with the Australian Tax Office (ATO). The Australian tax year runs from 1 July to 30 June. Substituted accounting periods can be obtained in certain circumstances.
Real estate agents are required to apply a 12.5 per cent withholding tax to the disposal by foreign residents of certain ‘taxable Australian property’, which will cover everything except residential property with a value of less than $750,000. This will include commercial property, agricultural property, mining interests, and residential property over this threshold.
These measures have been introduced as the government believes that a number of foreigners are buying and selling real estate in Australia and evading Australian tax. This withholding tax is designed really to bring foreigners onto the ‘radar’ of the tax authorities as they have no other way of detecting them. The amount withheld is a non-final withholding tax and will be credited to the account of the foreign resident payee when calculating their final income tax position for the relevant tax year. The foreign resident will still be required to have a tax file number and will have to lodge an Australian income tax return disclosing the sale of the property.
It is proposed to increase the rate of withholding to 15 per cent on the 1st of July 2025 and have a $0 threshold.
Foreigners who purchase a new house or apartment will be subject to a federal levy unless the property is occupied for six months a year, either by the owners or rented to tenants. The state of Victoria also imposes a vacancy tax.
Australia does not impose any gift, inheritance, or estate taxes on the death of an owner, unless assets are left to a foreign resident. On death, the beneficiary of an estate inherits the cost base of the property of the deceased. If a gift of property is made during the lifetime of an individual to a related party, it is deemed to be disposed of for the market value at the time of the gift.
While Australia remains an attractive destination for foreign property investment, it is crucial for prospective buyers to understand the specific legal and tax requirements associated with different property types. If you’re a foreign resident interested in investing in Australia, or an Australian resident looking to invest in a different jurisdiction, our team can help.
BDO is one of the largest full-service audit, tax and advisory networks in the world. We offer you access to a network of highly skilled practitioners in an international context. Many of our clients’ operations span multiple jurisdictions and we regularly create teams that combine local and global resources to match their needs. You can be assured that by working with BDO, it will have access to a seamless, global high-quality service.