divider

NEWS & PUBLICATIONS

separator

Stamp Duty Surcharge for Foreign Buyers: How Does it Work?

/ 0 Comments /

The Victorian Government has enacted a Bill that implements a 3% stamp duty surcharge on foreign purchasers of residential property .

The surcharge in practice:

The 3 per cent surcharge will be calculated on top of the usual duty rates for transactions entered into and settled on or after 1 July 2015 relating to ‘residential property’.

Concessions for purchasing off-the-plan (OTP) properties will still apply. However, the 3% surcharge will be calculated off the full purchase price.

http://www.dreamstime.com/royalty-free-stock-images-marina-bay-sands-hotel-casino-image19093599

Example:
Kelvin Khoo (KK) is a foreign purchaser. KK enters into the contract for an OTP apartment, with a purchase price of $500,000. We have assumed that the land value as at the date of contract before construction is $170,000.

Scenario 1:
KK entered into the Contract on 30 June 2015. The amount of stamp duty KK will have to pay is $5,270

Scenario 2:
KK entered into the Contract on 1 July 2015. The amount of stamp duty KK will have to pay is $20,270 (an additional $15,000)

Scenario 3:
KK entered into the Contract on 30 June 2015, but subsequently nominates his wife on 1 July 2015. This nomination done on or after 1 July 2015 triggers the 3% surcharge and stamp duty payable is subsequently $20,270. *

* NB: If the property is established property (not OTP) and there was no additional consideration or development after nomination, the surcharge does not apply.

A foreign purchaser is a natural person who is not:
• An Australian citizen, permanent resident or New Zealand citizen.
• A foreign corporation or trust is determined by the source of a foreign controlling interest, whether direct or indirect. This is not circumvented by incorporation in Australia.
The ‘controlling interest’ is defined as possession 50 % or more in shareholding, voting power or potential voting power.

‘Residential property’ means land in Victoria on which a building is constructed for or intended to be constructed for residential purposes.

If you are unsure about your rights as a foreign purchaser when purchasing property, please do not hesitate to contact the team at Capstone Legal.

 

Article contributed by Thorton Teow, Legal Intern.
12 April 2016

separator

No comments so far!

separator

Leave a Comment


separator