Changes to the Duties Act 2000 – Exemption from the foreign purchaser additional 7% stamp duty effective 1 July 2018
In 2015, the State Revenue Office introduced additional stamp duty of 3% which increased to 7% on 1 July 2017 on the purchase price of residential properties acquired by foreign purchasers.
The position has now changed and alleviates foreign purchasers of the additional stamp duty if they meet a certain criteria.
Effective from 1 July 2018, foreign purchasers are exempt from the additional 7% stamp duty if they meet all of the following criteria:
- The purchase is of residential property;
- They purchase the residential property jointly (either as joint proprietors or tenants in common) with their spouse or domestic partner who are Australian citizens, Australian permanent residents or New Zealand citizens holding a special category visa;
- They live in the property as their principal place of residence for a continuous period of at least 12 months commencing within 12 months from the settlement date.
It is noteworthy that the above exemptions apply to all transfers of land from 14 June 2018 regardless of the Contract date.
If you are a foreign purchaser and you purchase a residential property with a purchase price of $1,000,000.00, the stamp duty is currently $55,000.00 plus an additional $70,000.00, totalling $125,000.00 payable to the State Revenue Office.
If you meet the criteria above, you will be exempt from the additional foreign purchaser stamp duty and save $70,000.00.
What does this mean for foreign purchasers?
Massive stamp duty savings and affordability to purchase residential property in Victoria.
Foreign purchasers must still comply with the Australian Government requirements for purchasing property and obtain Foreign Investment Review Board approval where required.
What does this mean for Estate Agents?
The market of purchasers has now expanded and foreign purchasers have more affordability to purchase properties in Victoria.
If you require assistance, we are more than happy to provide you with legal advice in relation to stamp duty payable and exemptions or concessions available and assist with your conveyance or any other property needs.
Please contact our property team should you have any queries.