Foreign buyers in QLD face new stamp duty surcharge
There has been plenty of talk about foreign investment within Australia lately and now Queensland has decided to join the party announcing that they will bring in a new 3 per cent surcharge on stamp duty for foreign buyers who purchase houses and apartments.
This 3 per cent surcharge applies in addition to the usual transfer duty payable on acquisitions of houses and apartments. It is thought that this new surcharge will come into effect on agreements entered into on or after 1 July 2016.
This stamp duty surcharge of three per cent was ruled out last year after Victoria introduced a similar measure, but it is strongly believed that foreign buyers of residential property who profit from capital gains should make contributions to the infrastructure and communities in the local area.
Queensland Treasurer Curtis Pitt says it would raise $15 million in the first year alone, pulling in $25 million annually.
This April, Victoria imposed a 7 per cent foreign investor surcharge, which has been raised from 3 per cent and will come into effect from 1 July 2016, but many believe this will scare away foreign investment, cut jobs in the construction sector from tradies to construction companies and create nervousness in the unit market.
The Baird government is set to introduce additional property taxes on foreign investors in its budget next week. According to Treasurer Curtis Pitt, the 3 per cent surcharge would add a small amount to the transfer duty already paid by property buyers.
The Queensland government isn’t the only ones proposing a new foreign buyer surcharge. Recently, the NSW government has also proposed that foreign buyers should face a 1.5 per cent surcharge, but according to iBuyNew CEO Mark Mendel, this isn’t high enough and foreign buyers instead should face surcharges of 3 per cent.
“Foreigners buying property in Australia should be paying a tax, but the 1.5 per cent surcharge that has been flagged [in NSW] isn’t high enough,” Mendel said.
“They should be slugged with a 3 per cent surcharge instead. By charging foreigners a higher surcharge, this gives the ordinary Australian property buyers a fair go at purchasing their own property. A higher surcharge will also allow foreigners to help contribute additionally to communities in the areas where the tax is collected.”
One of the reasons that many people feel that introducing a foreign buyer surcharge in Queensland is a bad idea is that Queensland would lose its competitive advantage over other states, particularly as VIC and NSW are also proposing similar surcharges.
Queensland still has plenty of appeal though and remains the most affordable state on the eastern seaboard. With many foreign buyers not actually planning on living in Australia, they are not contributing to the local economy and are in fact just enjoying the benefits of capital growth from the property they purchase. This 3 per cent surcharge can therefore be used to help improve the liveability of the communities.
However, it’s not all doom and gloom as the QLD Government are also proposing a new first home owner grant, increasing from $15,000 to $20,000 for one year only on homes valued at less than $750,000.
If you are a foreign buyer looking to purchase a property in Australia, then the expert Property Consultants at iBuyNew can assist you and help you understand the new requirements and what surcharges will apply to your transaction after the budget is announced on 21 June.
To learn more about purchasing property as a foreign buyer or to discover what new property is available to buy today, why not contact the friendly team on 1300 123 463.
Published on 14th of June 2016 by Marty Stanowich