With the increasing prevalence of Hong Kong residents migrating to Australia in recent years, many are purchasing property for both personal use and investment. However, tax policies for foreigners purchasing property vary significantly across states, particularly regarding additional taxes levied upon purchase and during the holding period, which require careful consideration. This article focuses on three states popular with Hong Kong residents—New South Wales, Victoria, and Queensland—and provides a detailed analysis and comparison of two key taxes relevant to foreigners.
Purchase stage: Surcharge Purchaser Duty/FPAD/AFAD
Foreigners who purchase property in Australia are required to pay the same stamp duty (Transfer Duty) as local residents, as well as an additional stamp duty for non-citizens or non-permanent residents. Although the names of the taxes vary slightly from state to state, the nature of the taxes is similar:
- New South Wales (NSW): Surcharge Purchaser Duty
From 2025, foreigners will have to pay an additional 9% The stamp duty is calculated separately from the original tax rate. - Victoria (VIC): Foreign Purchaser Additional Duty (FPAD)
This state uses the FPAD name and the tax rate is 8%, applicable to the purchase of residential properties. - Queensland (QLD): Additional Foreign Acquirer Duty (AFAD)
Local taxes levied on foreign buyers 7% The AFAD is one of the lowest in Australia.
This tax is a one-time payment that is calculated and paid together with the standard stamp duty when the property is sold and the title is transferred.
Holding stage: Land Tax Surcharge/Absentee Surcharge
After the transaction is completed, if a foreigner holds a residential property, he or she will still need to pay land tax every year, and there will be additional fees:
- New South Wales (NSW): Land Tax Surcharge
From 2023 onwards, foreigners will have to pay an additional annual 4% A land tax surcharge is imposed, which has no minimum threshold and is levied separately from ordinary land tax. - Victoria (VIC): Absentee Owner Surcharge
The tax rate is also 4%, applicable to owners who do not reside in Australia but hold residential land. - Queensland (QLD): Absentee Surcharge
Relatively loose, the tax rate is 2%, targeting the factor of "not settling in Australia" rather than "nationality".
It’s important to note that this tax is calculated annually based on the ownership status as of December 31st and will be reflected in the following year’s land tax notice. For investors who hold and rent out properties for the long term, the tax burden cannot be ignored.
Bonus: Tax Exemption and Refund Arrangements
While the above tax applies to foreign individuals, some temporary visa holders (e.g., spouse visas 820/309, 405 retirement visas, etc.) who have resided in Australia for more than 200 days may be eligible for exemption or rebate. Both Victoria and New South Wales have established review mechanisms, but the procedures are complex and require detailed proof of residency.
Comparison of property taxes for foreigners (NSW, VIC, QLD)
| Tax name | New South Wales (NSW) | Victoria (VIC) | Queensland (QLD) |
|---|---|---|---|
| Stamp duty surcharge for home purchases | Surcharge Purchaser Duty:9% | Foreign Purchaser Additional Duty (FPAD):8% | Additional Foreign Acquirer Duty (AFAD):7% |
| Land tax surcharge | Land Tax Surcharge:4% | Absentee Owner Surcharge:4% | Absentee Surcharge:2% |
| Collection time | One-time payment upon purchase | One-time payment upon purchase | One-time payment upon purchase |
| Land tax collection period | Calculated based on the land value after the holding date (December 31) each year | Same as above | Same as above |
| Can I apply for an exemption? | Yes (such as spouse visa or residency for 200 days) | Yes (if proof of residence is available) | Yes (if tax resident or jointly held with spouse) |
Quick Analysis:
- NSW has the heaviest tax burden: An additional 9% must be paid when purchasing a house, and an additional 4% holding tax is added each year. The impact is particularly significant for long-term investors.
- VIC is high but stable: Additional stamp duty 8%, 4% when holding, similar to NSW, but overall house prices are slightly lower.
- QLD is the most relaxed: The purchase price is only 7%, and the land tax surcharge is only 2%, which is more attractive to those with a tighter budget.
Summary: Tax burdens vary among the three regions, so investment strategies should be tailored to your budget.
Overall,NSW has the highest tax burden (9% when buying and 4% when holding), followed by VIC (8% + 4%), and QLD is relatively mild (7% + 2%).Taking a residential property worth A$1 million as an example, NSW will have to pay an additional A$90,000 in stamp duty alone, and if held for ten years, it may cost an additional A$100,000 in land tax surcharges.
Those interested in investing in Australian property or purchasing property after immigration should plan their tax structure and eligibility requirements early to avoid uninformed and high costs. If in doubt, it is recommended to consult a real estate lawyer or tax advisor familiar with the laws of each state in Australia.
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