Remember this article from last year? In it, we shared the news that foreign investors buying real estate in the Australian state of Victoria will have to pay a 3% tax on the purchase price starting in July last year.
7% Stamp Duty
Well, history seems to be repeating itself, because effective July 1 this year, foreign property investors who buy property in Victoria will be subject to an additional 4% stamp duty on top of the previous 3%, making it a stamp duty of 7% on purchases of houses, apartments and vacant residential zoned land in Melbourne and across Victoria by foreigners.
So, why the rate hike exactly a year after the previous one? It seems that the Victorian government is taking action to ensure foreign buyers of residential property — who do not pay payroll tax and GST — contribute their fair share to the liveability of the state, and maintenance and development of government services.
The new (higher) tax rate will apply to contracts signed on or after 1 July 2016.
1.5% Absentee Land Tax
That’s not the only hike, though. Last year, the Victoria government announced that foreign buyers would also be required to pay an “absentee land tax” of 0.5% from July 2016 if they do not occupy the homes they have purchased. This year, they decided to increase the tax surcharge on “absentee landholders” to 1.5%, an effort to curb foreign investors from hoarding properties but not staying in them, resulting in empty homes and apartments.
But then again, if you can afford it, it will definitely be a smart move to invest in overseas properties and expand your portfolio. After all, diversity is the key to success and wealth, right? Check out our Estate123 Overseas section for a whole range of options for Australia properties. After all, the 4% stamp duty surcharge for foreign buyers in the state of New South Wales is just that tiny bit lower.