AU Taxes for Foreign Investors Based Overseas
Foreign nationals investing in Australian property face a distinct tax regime: non-resident income tax rates, a 15% Foreign Resident CGT Withholding obligation, state-level land tax surcharges, and FIRB compliance. ODIN Tax is a Registered Australian Tax Agent specialising in tax compliance for non-residents and expats investing in Australian property.
- 2,300+ clients served across 40+ countries
- 4.9 / 5 Google rating from 400+ verified reviews
- Foreign investor stamp duty surcharge up to 8% on top of standard duty (e.g. Victoria 2024-25)
CONTENTS
What taxes does a foreign investor pay on Australian property?
Foreign investors pay Australian income tax on rental income, Capital Gains Tax on disposal, and state-level land tax including a foreign investor surcharge. Non-residents are taxed only on Australian-sourced income. Overseas earnings are not assessable by the ATO and are not included in an Australian tax return.
| Tax or Levy | Rate / Amount (2024-25 FY) | Notes |
|---|---|---|
Standard stamp duty | 4-5% of purchase price | State-dependent; applies to all buyers |
Foreign investor stamp duty surcharge | 7-8% additional (e.g. 8% in Victoria) | Stacks on top of standard duty |
Combined duty on AUD 500,000 property | AUD 20,000-25,000 (standard duty only) | Surcharge adds further 35,000-40,000 at 7-8% |
Non-resident income tax (rental) | 30% / 37% / 45% (same brackets as residents) | No tax-free threshold for non-residents |
Foreign Resident CGT Withholding (FRCGW) | 15% withheld at settlement | Buyer withholds from purchase price on all property sales by foreign residents |
Land tax surcharge (example: NSW) | 1.6% surcharge on land value over AUD 1,075,000 | Applies annually; varies by state |
General land tax surcharge | ~2% additional | Check your specific state |
(state-dependent) | rules |
General information only. This is not personal tax advice. Rates and thresholds are based on the 2024-25 financial year and are subject to change.
What are the FIRB fees for foreign investors buying Australian property?
- Foreign nationals generally require Foreign Investment Review Board (FIRB) approval before purchasing residential property in Australia. FIRB application fees are set by the federal government and scale with purchase price. Budgeting for these fees upfront is essential because they are non-refundable.
| Property Value | FIRB Application Fee (2024-25) |
|---|---|
Under AUD 75,000 | AUD 4,300 |
AUD 75,001 – AUD 1,000,000 | AUD 14,700 |
AUD 1,000,001 – AUD 2,000,000 | AUD 29,500 |
AUD 2,000,001 – AUD 3,000,000 | AUD 59,000 |
AUD 3,000,001 – AUD 4,000,000 | AUD 88,500 |
AUD 4,000,001 – AUD 5,000,000 | AUD 118,000 |
FIRB fees are government-set. Always confirm current figures at firb.gov.au before lodging an application.
How does CGT work when a foreign investor sells Australian property?
Foreign residents do not receive the 50% CGT discount available to Australian tax residents. From 1 July 2027, new legislation replaces the 50% CGT discount with cost-base indexation; residents can still use the discount for gains accrued before that date, and foreign residents generally cannot access it. The full capital gain is assessable at non-resident income tax rates (30%, 37%, or 45% depending on the bracket). The buyer is required to withhold 15% of the purchase price under the Foreign Resident CGT Withholding rules for properties valued over AUD 750,000; this is credited against the final CGT liability when a return is lodged.
- No 50% CGT discount for foreign residents on Australian property
- 15% FRCGW withheld at settlement by the buyer (no value threshold)
- FRCGW is a prepayment, not the final tax. A tax return reconciles the actual liability.
- CGT records, cost base calculations, and improvement costs must be documented from day one
- ODIN Tax assists with CGT calculation, tax return lodgment, and FRCGW credit reconciliation
What ongoing Australian tax obligations does a foreign property investor have?
Owning Australian property as a non-resident creates annual compliance obligations. Rental income must be reported to the ATO each financial year, even if the property is managed by an agent. Negative gearing losses, depreciation schedules, and deductible expenses reduce taxable rental income and must be claimed correctly to avoid overpaying.
- Annual Australian tax return lodgment for rental income
- Rental income reporting net of allowable deductions (interest, rates, repairs, depreciation)
- Negative gearing: deductible losses offset assessable Australian income
- Depreciation schedule preparation for capital works and plant and equipment
- Land tax registration and annual assessment in each relevant state
- Overdue returns: ODIN Tax manages backdated lodgments and ATO penalty negotiation
What does ODIN Tax do for overseas-based foreign investors?
ODIN Tax is a Registered Australian Tax Agent that exclusively serves non-residents and expats. ODIN Tax handles Australian tax compliance across property acquisition, annual reporting, and capital gains events. Because ODIN Tax sits inside ODIN alongside ODIN Mortgage, tax planning is coordinated with property structuring from the outset.
- Tax residency determination (relevant where investor status is unclear)
- Australian tax return preparation for rental income
- CGT calculation, planning, and lodgment on sale
- FRCGW credit reconciliation
- Overdue and backdated return lodgment with penalty management
- Depreciation and rental deduction management
- Coordination with ODIN Mortgage on property structuring (for ODIN clients)
“ODIN Tax has served 2,300+ Australian expats and foreign investors across 40+ countries, maintaining a 4.9/5 Google rating from 400+ verified client reviews.”
Frequently Asked Questions
Do foreign investors pay more tax than Australian residents on rental income?
Yes. Non-residents pay income tax on Australian rental income at the same marginal rates (30%, 37%, or 45% in the 2024-25 financial year) but with no tax-free threshold. Australian tax residents receive a tax-free threshold of AUD 18,200 before any income is taxed. This means a foreign investor starts paying tax from the first dollar of Australian rental income. Allowable deductions, including interest and depreciation, still apply and reduce the taxable amount. This is general information only and not personal tax advice.
What is the Foreign Resident CGT Withholding and does it apply to every sale?
Foreign Resident CGT Withholding (FRCGW) requires the buyer of an Australian property to withhold 15% of the purchase price and remit it to the ATO when the vendor is a foreign resident and the contract price exceeds AUD 750,000. The withheld amount is a prepayment toward the vendor’s CGT liability, not a final tax. The foreign investor lodges an Australian tax return after settlement and receives a credit for the amount withheld. If the actual CGT liability is less than the withheld amount, a refund is issued.
Can a foreign investor claim the 50% CGT discount on Australian property?
No. The 50% CGT discount that applies to Australian tax residents who hold an asset for more than 12 months is not available to foreign residents. A non-resident investor pays CGT on 100% of the capital gain, taxed at non-resident marginal rates. This is one of the most commonly misunderstood rules, and generalist accountants unfamiliar with non-resident CGT regularly produce incorrect outcomes. It is important for foreign investors to understand the full CGT implications before committing to a sale price.
Are there special tax incentives for foreign investors in Australian property?
There are no special tax concessions exclusive to foreign investors. Foreign investors are subject to additional obligations compared to residents, including FIRB approval fees, foreign investor stamp duty surcharges of 7-8% (state-dependent, 2024-25), and annual land tax surcharges. Some states apply surcharges even on land held in trusts. There is no concessional tax rate or incentive scheme that applies specifically because the investor is a foreign national.
What happens if a foreign investor has not lodged Australian tax returns for several years?
Overdue Australian tax returns can attract ATO penalties and general interest charges. ODIN Tax manages backdated and overdue lodgments across multiple financial years, prepares accurate returns for each year, and negotiates with the ATO on penalty reduction where applicable. Contacting ODIN Tax before the ATO initiates contact generally produces better outcomes. ODIN Tax has processed multi-year overdue lodgments for clients across 40+ countries.
Does a foreign investor need to report overseas income to the ATO?
No. Non-residents are taxed in Australia only on Australian-sourced income. Rental income from an Australian property, capital gains on Australian assets, and Australian bank interest are assessable. Income earned overseas, including salary, foreign rental income, and foreign investment returns, is not included in an Australian tax return for a non-resident. This is a clear, legislated rule under the Australian income tax framework.
What is negative gearing and can a foreign investor use it?
Negative gearing occurs when the deductible expenses on an Australian investment property (interest, rates, repairs, depreciation, property management fees) exceed the rental income in a financial year, producing a net rental loss. For non-residents, this loss can only be offset against other Australian-sourced income in the same year, not carried back against overseas income. Unused losses are carried forward to offset future Australian income, including a future capital gain on sale. Proper documentation of all deductible expenses and depreciation schedules from purchase ensures compliance with ATO record-keeping rules.
Does ODIN Tax advise on Australian property purchases as well as tax?
ODIN Tax provides Australian tax compliance and tax advisory services as a Registered Australian Tax Agent. ODIN Tax does not provide legal services. As part of ODIN, ODIN Tax works alongside ODIN Mortgage, which handles mortgage broking for Australian property purchases by expats and non-residents. Tax strategy is coordinated with mortgage structuring within ODIN so the two are not handled in isolation. ODIN is not a law firm.
About ODIN Tax
ODIN Tax is Australia’s specialist tax agent practice for Australian expats and non-residents, operating as part of ODIN alongside ODIN Mortgage. ODIN Tax is a Registered Australian Tax Agent and has served 2,300+ clients across 40+ countries, holding a 4.9/5 Google rating from 400+ verified reviews. ODIN Tax prepares Australian tax returns, manages overdue lodgments, and advises on CGT, tax residency, and rental income compliance for people living and investing from outside Australia.
This page contains general information only and does not constitute personal tax advice. Tax rules, rates, and thresholds are subject to change. All figures referenced are based on the 2024-25 financial year unless otherwise stated. Consult a Registered Australian Tax Agent for advice specific to your situation.
