If you or someone you know is a foreign resident and about to buy a block of land or a new home, you will now need to pay a stamp duty surcharge as of 1 January 2018. This has been introduced as the ‘Foreign Ownership Surcharge’.
To understand more on how this will impact you, we have a brief run down below.
Firstly, what does the ‘Foreign Ownership Surcharge’ mean?
Any person that is classed as being a foreign purchaser, whether buying as an individual or as part of a Corporation or Trust, will need to pay a stamp duty surcharge on top of the normal stamp duty charged by Revenue SA.
This surcharge relates to any property settlement where the Land Titles Office document is entered after 1 January 2018, regardless of the date that may be on the Contract.
What real estate purchases will be impacted by this?
The surcharge will be added to any purchase regarded as residential, this includes vacant land. If the property is commercial or used for commercial purposes, then it won’t be charged.
However, if there is a transaction which is exempt from the stamp duty, then the surcharge will not be added.
This new surcharge will be added to all transactions, even for properties that are being bought as an investment property.
Are you classed as a foreign purchaser?
If you are not an Australian Citizen, or hold a permanent visa or a New Zealand Citizen without the special category visa, then you are a foreign purchaser.
This also applies to a Corporation or Trust which has not been set up under the Australian jurisdiction.
How much is the surcharge?
The surcharge is currently 7% of the value of the interest that is being purchased by the foreign purchaser.
If within 3 years of the purchase of the property, a person or the Trust becomes a foreign purchaser, then the Revenue SA commissioner needs to be notified and the surcharge will still be imposed.
The information provided above is only brief and is detailed further here on the Revenue SA website, however if you have any other questions, please feel free to contact our office.