What Are the Property Taxes for Non Residents & Foreigners in Australia?

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Owning a house comes with a lot of hidden costs. One of which is Australian taxes. Australian residents and non-residents pay different amounts of tax on their property. What are the property taxes for non-residents & foreigners in Australia?

There are two definitions of non-resident that we first need to clarify. You may be a non-resident for tax purposes – this covers expats who only pay tax on their Australian-sourced income. You’re an Australian citizen but not for tax. Secondly, you might be a foreign national living in Australia and treated as a resident for tax purposes.

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Australian Property Taxes For Non Residents and Foreigners

Non-residents for tax purposes and foreign residents must pay a range of taxes on their property. We’ll clarify who has to pay and how much with each one.

Income Tax

Anyone earning an income in Australia must pay taxes, including rental properties. If you’re a tax resident, you must pay at the resident marginal tax rates. If you’re an expat (non-tax resident), you must pay the foreign resident tax rate, which is fairly high. Non-tax residents must pay 32.5% on all earnings below $120,000.

Remember, you can deduct property-related expenses from your income tax return. These include:

  • Advertising costs for tenants
  • Bank charges
  • Body corporate fees
  • Borrowing expenses (home loan interest and other fees)
  • Council rates
  • Depreciation (the declining value of assets)
  • Insurance
  • Land tax
  • Property management fees
  • Repairs and maintenance
  • Gardening
  • Pest control

Capital Gains Tax

You pay capital gains tax on the sale of assets. Australian citizens are eligible for the main residence exemption – they don’t pay CGT on their primary residence if they have lived in it for more than 12 months. Unfortunately, the main residence exemption isn’t available for non-residents or expats.

Therefore, you must pay capital gains tax if selling your property. CGT is the same tax as your income tax. You must add your capital gains to your Australian income on your tax return for that financial year.

Australian tax residents must be careful of CGT if selling a property abroad. As tax residents pay Australian tax on all worldwide income, foreign assets are liable for CGT. Seek professional advice to avoid paying CGT.

Stamp Duty

You pay capital gains tax when selling, whereas you pay stamp duty when purchasing a property. Stamp duty rates differ between states – typically between 4% – 5% of the property value.

Australian citizens – including expats – have to pay stamp duty on all property purchases. However, foreign citizens must also pay a stamp duty surcharge in most states. The surcharge ranges between 7-8% for non-resident stamp duty in Australia. The Northern Territory and ACT don’t impose a surcharge.

If you’re an expat buying property with a foreign spouse, you must pay the surcharge. Therefore, it’s worth considering if you should keep your partner off the property title.

Land Tax

Land taxes are an annual tax on all properties. As with stamp duty, most states offer main residence exemptions. Additionally, primary production land and charity land are exempt. However, as an expat, land tax applies to Australian investment property. State governments calculate land tax on the total taxable value of your property.

Land tax laws differ between states – the Northern Territory doesn’t charge land taxes.

So, in summary, foreigners and non-residents for tax purposes investing in Australian real estate pay all standard property taxes except that they may pay higher withholding rates for the capital gains tax. Consult with one of our Australian tax advisors from Odin Tax for more personalised advice.

What are the Property Taxes for Non-Residents in Australia

Who Pays Land Tax?

Anyone who owns or jointly owns the following might have to pay land tax to their local council or Australian state government:

  • Vacant land and rural land
  • Residential properties (both houses and units)
  • A holiday home
  • An investment property or properties
  • Residential, commercial, or industrial units – including car spaces
  • Commercial properties, such as factories, shops, or warehouses
  • Land leased from the local government.

You must pay land tax whether or not you earn an income. For instance, if your rental property or holiday home is empty, you must still pay land tax.

What Do You Not Pay Land Tax On?

Generally speaking, you don’t need to pay land tax on:

  • Your principal place of residence, i.e., your home
  • A farm
  • Any charity land use
  • Land with a total taxable value below the land tax threshold

However, check specific exemptions for your state, as they are not all the same.

Land Tax Threshold: State by State

So, what is the Australian land tax for foreigners in each state?

New South Wales

The Valuer-General determines land value in New South Wales at the beginning of each tax year. NSW defines land value as the unimproved value of the land. The valuer assesses the taxable value on the average value of the last three years.

  • Up to $822,000: No land tax
  • $822,000 – $5,026,000: 1.6% of the total value
  • $5,026,000 and Above: 2% of the total value

Additionally, NSW offers a discount for new build-to-rent properties until 2040 to boost the housing supply.

What are the Property Taxes for Non-Residents in Australia

Victoria

You must pay land taxes on Victorian property and land above $300,000. Victoria imposes a marginal tax rate.

  • $300,000 – $600,000 Land Value: $375 plus 0.2% of the amount below $300,000
  • $600,000 – $1,000,000 Land Value: $975 plus 0.5% of the amount below $600,000
  • $1,000,000 – $1,800,000 Land Value: $2,975 plus 0.8% of the amount below $1,000,000

And so on.

Western Australia

Western Australia also uses a marginal tax rate.

  • Below $300,000: No land tax
  • $300,001 – $420,000: $300 flat rate
  • $420,000 – $1,000,000: $300 plus 0.25% over $420,000

South Australia

  • Up to $482,000: No land tax
  • $482,000 – $774,000 Land Value: 0.5% of the land value
  • $774,000 – $1,126,000 Land Value: $1,460 plus 1.25% of the land value

Tasmania

  • Up to $49,000: No land tax
  • ​$50,000 – $399,999.99: $50 plus 0.55% above $50,000
  • $400,000 and Above:  ​$1,975 plus 1.5% above $400,000

Queensland

  • Up to $599,999: No land tax 
  • $600,000 – $999,999: $500 plus 1% above $600,000
  • $1,000,000 – $2,999,999: $4,500 plus 1.65% above $1,000,000

Northern Territory

You don’t have to pay land tax at all in the Northern Territory.

ACT

Land tax is assessed quarterly rather than yearly in the ACT. They have a fixed charge of $1,392.

  • Up to $150,000: 0.54% of the land value
  • $150,000 – $275,000: $810 plus 0.64% above $150,000
  • $275,001 – $2,000,000: $1,610 plus 1.12% above $275,001
What are the Property Taxes for Non-Residents in Australia

Foreign Ownership Surcharge

Many states also implement a foreign ownership surcharge. This only applies to foreign nationals, not expats. The surcharge ranges between 0.75% (ACT) to 2% (NSW).

As with the foreign resident stamp duty surcharge, it adds a hefty sum to the purchase of your property. If you can avoid paying the foreign ownership property tax, it could save you significant amounts.

Key Takeaways: Property Taxes for Non-Residents in Australia

Non-residents can make informed decisions about investing in Australian property and minimise their overall tax liability. Here are some takeaways that you need to consider:

  • Non-residents must pay income tax, capital gains tax, stamp duty, and land tax on their Australian property.
  • Australians and non-residents must pay land tax on any land with residential properties, holiday homes, company units, and even vacant land.
  • Land tax is calculated on the value of your land and differs between states.
  • Main residents, farms, and charity land are typically exempt.
  • Non-residents must pay foreign surcharges on stamp duty and land tax in most states.

Unlock the Potential of Australian Property Investment

Dreaming of owning a piece of Australia’s vibrant property market? As a non-resident, it can be a lucrative venture, but navigating the tax complexities can feel like trekking through the Outback blindfolded.

That’s where Odin Mortgage comes in. We’re your trusted guide, ready to illuminate the path to successful property investment in Australia.

Schedule a consultation today with Odin Mortgage to unlock your Australian property investment potential.

Get a free Australian mortgage assessment today.

Apply online to get a free recommendation with real rates and repayments.

Frequently Asked Questions

Property owners in Australia must pay income tax (on rental properties), capital gains tax, stamp duty, and land tax. The land tax rate differs between states and doesn’t exist in the Northern Territory. Land tax is based on the value of the land, determined on a yearly basis (quarterly in the ACT).

Australian and non-resident taxpayers must pay tax on all income earned in Australia (and worldwide income if you’re an Australian resident). If you own property in Australia, you must also pay stamp duty, capital gains tax, and land tax. Foreign residents might also pay stamp duty and land tax surcharges.

Each state has different marginal land tax rates in Australia. Most have a tax-free threshold, except for ACT. For example, in New South Wales, you don’t need to pay if the land value is below $822,000. Above that, you must pay 1.6% of the value.

All landowners must pay land tax in Australia. The only exceptions are:

  • If your land is valued below the threshold
  • If your land is your primary place of residence
  • If your land is a farm
  • If your land is used for charity purposes

When you buy a house in Australia, you must pay stamp duty and land tax. You might also need to pay a surcharge if you’re a foreign national. If you rent out your property, you will need to pay income tax. When you sell, you pay capital gains tax.

Property taxes for non-residents in Australia can be quite complex, as they vary depending on the state or territory, type of property, and other factors.

Here’s a simple overview of Australian property tax regulations for foreigners:

  • Stamp Duty: Additional 7-8% surcharge for foreigners in most states.
  • Land Tax: Surcharge of around 2% in some states.
  • Capital Gains Tax: No 50% CGT discount for non-residents.
  • FIRB Fees: Required for property purchase approvals.
  • Vacancy Fees: Apply if the property is vacant for more than 183 days.

It’s important to consult with a local tax advisor or legal expert to get the most accurate and tailored advice based on individual circumstances and the latest regulations.

Non-resident property tax rates in Australia vary by state and type of tax. Here is an overview of the key taxes and rates applicable to non-residents.

  • Stamp Duty Surcharges: 7-8% additional surcharge for non-residents in most states.
  • Land Tax Surcharges: 2% additional surcharge in New South Wales and Victoria.
  • Capital Gains Tax: No 50% discount for non-residents; based on income tax rate.
  • FIRB Fees: Ranging from AUD 5,600 to higher amounts depending on property value.
  • Vacancy Fees: Equal to FIRB application fee if the property is vacant for over 183 days.

Consult a local tax advisor or legal expert for the most accurate and tailored advice based on your specific circumstances and the latest Australian property tax regulations for foreigners.

Foreigners investing in Australian real estate are subject to various taxes, including stamp duty, land tax, capital gains tax, and foreign investment review board (FIRB) fees. These taxes can vary significantly depending on the state or territory and the specific circumstances of the property purchase and ownership.

Here is a breakdown of these taxes.

  • Stamp Duty Surcharge: 7-8% additional surcharge in most states
  • Land Tax Surcharge: 2% additional surcharge in New South Wales and Victoria
  • Capital Gains Tax: No 50% discount; calculated at the non-resident’s income tax rate
  • FIRB Fees: From AUD 5,600, increasing with property value
  • Vacancy Fees: If property is vacant for over 183 days, equal to FIRB fee

Make sure to consult a local tax advisor or legal expert for accurate and tailored advice.

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