As a result of changes introduced in the 2017 Budget, for agreements entered into for the purchase of residential real estate on or after 1 July 2017, the purchaser duty surcharge rate has increased from 4 per cent to 8 per cent. The surcharge is in addition to the duty payable on the purchase of residential property (commonly referred to as stamp duty).
Foreign persons are also no longer entitled to the 12 month deferral for the payment of stamp duty for off-the-plan purchases of residential property. Payment of stamp duty must be made within 3 months of the date of exchange of a contract to purchase property.
By way of example, on the purchase of an off plan property for a price of $750,000, foreign buyers would now have to pay the following duty:
|Foreigner surcharge duty||$60,000|
The foreign purchaser surcharge duty is payable in addition to the $5,000 fee payable by a foreigner for FIRB approval to purchase the property.
It will be interesting to see what effect this increased duty and fees has on the numbers of foreigners entering into contracts to purchase off plan apartments in Sydney. Anecdotally, there has already been a significant drop off in interest from and transactions with foreign buyers for off plan residential property in NSW.