The NSW Government’s proposed 2022-2023 Budget not only included the stamp duty reform mentioned in our last article. It also included the increase of land tax surcharge for foreign landowners. The surcharge will be increased from 2% to 4% of the taxable value of the residential land starting in the 2023 land tax year.
Who needs to pay Foreign Owner Surcharge Land Tax?
As suggested by the name, only foreign persons who own residential land in NSW is required to pay for this Surcharge Land Tax. You are considered a foreign person, unless:
- You are an Australian citizen; or
- You’ve lived in Australia for 200 days or more in the 12 months prior to the taxing date of 31 December, and you’re:
- A permanent resident of Australia, or
- A New Zealand citizen, who holds a subclass 444 visa.
This reform of Land Tax makes foreign landowners responsible for the general land tax as well as the surcharge land tax, totaling approximately 6% of the total value of the taxable land on a yearly basis.
Why the sudden hike?
The property market in NSW experienced upswing for the past few years leading to many foreign buyers purchased properties within NSW creating a shortage of properties in NSW. This increase of surcharge land tax proposed by the NSW Government is no doubt a move to create larger financial burden upon foreign landowners, which may lead potential foreign buyers to look for properties in other states and slow the property market in NSWs.
Should you have any enquiries in relation to the increase of surcharge land tax, please feel free to contact our office on 02-92674988.