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More Foreign Investor Pain

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Is a 3% increase in stamp duty for foreign investment good for Victoria?

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Following our last post regarding the proposed impost on foreign buyers from the Foreign Investment Review Board,  the State government of Victoria has also recently introduced reforms on foreign investment. With effect from 1 July 2015, the Government proposes to increase the rate of stamp duty charged on transfers of real property by 3% where the transfer is made to any person or entity that is not a permanent Australian resident or a New Zealand citizen at the time of the transaction.

Furthermore, the reforms proposed include a 0.5% increase on land tax for absentee property owners from 1 July 2016.

It is obviously going to be a big disincentive for foreign investment into Victoria, especially with the proposed FIRB surcharge, not to mention the fact that Victoria already has the highest stamp duty impost in Australia by a country mile. Not surprisingly, many developers have come out against it.

We have already received a number of queries from our clients about whether it will affect their existing contracts. The Budget has not been passed and there is little or no legislative updates  known about how it will be implemented. Having said that, we believe it would be unlikely that these reforms will have a retrospective effect and would more likely apply to contracts entered into AFTER 1 July.

What are your view on this:

  • Will a 3% stamp duty increase help or hinder the property market in Victoria?
  • Do you agree that there is already extra stamp duty being paid because of inflated property prices due to the foreign investment effect?
  • Will local property owners and investors benefit from having a 2-tiered pricing system? 

 

 

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