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


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.


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


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