If you’re a non-resident considering investing in Australian property, one of the most important things you need to understand is how property taxes work.
Australia has a specific set of tax rules that apply to non-residents, which can differ significantly from those that apply to residents.
From land tax to capital gains tax, it’s essential to have a clear picture of what to expect financially before you take the plunge. This guide will break down the key property taxes for non-residents in Australia, ensuring you’re well-informed about your obligations.
Before you even consider buying property, non-residents (foreigners) are required to get approval from the Foreign Investment Review Board (FIRB). This approval ensures that the Australian government has a say in foreign investments, especially in sensitive areas like residential property.
Key Points
- Who Needs It? Non-residents, including foreign individuals and companies, must apply for FIRB approval if they want to buy residential property in Australia.
- Application Fees: The fees can range from AUD 5,000 to AUD 100,000 depending on the value of the property. For example, a property valued between AUD 1 million and AUD 10 million will cost you about AUD 20,000 in application fees.
- FIRB Approval: Without FIRB approval, any property purchase by a non-resident may be deemed invalid, and the government can take legal action to reverse the sale.
Why It Matters
Non-residents must factor the FIRB application fee into their overall investment costs. The approval process is also time-consuming, so planning ahead is crucial.
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Stamp Duty on Property for Non-Residents
Stamp duty is a one-off tax applied when purchasing property in Australia, and it applies to both residents and non-residents. However, for non-residents, there may be additional charges.
Key Points
- Who Pays It? Stamp duty is applicable to both residents and non-residents. The rate varies by state and territory.
- Extra Surcharge for Foreign Buyers: Non-residents are often subject to a foreign buyer surcharge. This additional tax can range from 3% to 8% of the property value, depending on the state or territory in which the property is located.
- State-Based Rates: Stamp duty rates vary greatly across different regions. For example, in New South Wales, the standard rate of stamp duty can range from 1.25% to 5.5% of the property value, but non-residents will pay an additional surcharge.
Why It Matters
Stamp duty can be one of the highest up-front costs associated with purchasing property. Non-residents should budget for both the standard stamp duty rate and the surcharge to avoid any surprises.
Land Tax in Australia for Non-Residents
Land tax is a recurring annual tax that is levied by state governments in Australia. This tax is based on the value of the land you own, and it can vary depending on where your property is located. For non-residents, the rules are slightly different.
Key Points
- Non-Residents Pay More: In most states, non-residents are subject to a higher land tax rate than Australian residents. For example, tax-free threshold doesn’t apply to foreign persons and PRs for any property in NSW.
- State-Specific Rates: Land tax is determined at the state level, so it’s important to check the rules in the specific state where you plan to invest. The rates and exemptions can vary significantly.
Why It Matters
Land tax can be a significant ongoing cost for property owners, especially in areas with high land values. Non-residents should research the land tax rates in the state where they plan to buy to estimate the annual costs.
If you want a detailed summary about your investment property in Australia, check out the Investment Property Calculator.
Land Tax Thresholds for Non-Residents
New South Wales
In New South Wales (NSW), property taxes are determined by the Valuer-General, who assesses the land value at the start of each tax year.
The land value is based on the unimproved value of the land, which is a crucial factor in calculating the land tax liability for both residents and non-residents.
Key Land Tax Details in NSW
- Taxable Value: Land tax is calculated based on the land value as of 31 December each year. The taxable value depends on the average land value over the past three years, with the minimum threshold for land tax set at $1,075,000 in 2024.
- Land Tax Rates:
- 1.6% for land values above the $1,075,000 threshold but below $6,571,000.
- 2% for land values above $6,571,000.
- Additional Surcharge for Foreign Owners: Non-residents and foreign owners are subject to a 5% surcharge on top of the regular land tax rates. This surcharge is applicable only on residential land owned by foreign persons.
Incentives for New Developments
To encourage housing supply, NSW provides discounts on land tax for newly built rental properties. These discounts are available until 2040, providing tax relief to those who build and lease new properties.
Additional Resources
For non-residents or those unfamiliar with NSW’s land tax system, the Revenue NSW website offers a land tax calculator to help estimate the potential tax liability.
Victoria
In Victoria, land tax is calculated based on the total taxable value of all land owned, excluding exempt properties such as your principal place of residence.
VIC Land Tax Rates
- Less than $50,000: No land tax payable.
- $50,000 to less than $100,000: $500.
- $100,000 to less than $300,000: $975.
- $300,000 to less than $600,000: $1,350 plus 0.3% of the amount above $300,000.
- $600,000 to less than $1,000,000: $2,250 plus 0.6% of the amount above $600,000.
- $1,000,000 to less than $1,800,000: $4,650 plus 0.9% of the amount above $1,000,000.
- $1,800,000 to less than $3,000,000: $11,850 plus 1.65% of the amount above $1,800,000.
- $3,000,000 and over: $31,650 plus 2.65% of the amount above $3,000,000.
Note: These rates apply to individuals and companies. Trusts may be subject to different rates.
Additional Surcharges in VIC
- Absentee Owner Surcharge: An additional 4% of the taxable land value applies to absentee owners, since 1 January 2024.
Exemptions
- Principal Place of Residence (PPR): Your primary home is generally exempt from land tax.
- Primary Production Land (PPL): Land used for primary production may be exempt.
For detailed information on exemptions and to calculate your specific land tax liability, please refer to the State Revenue Office of Victoria’s official website.
Queensland
- No land tax is owed for properties valued at $599,999 or less.
- For properties valued between $600,000 and $999,999, the tax is $500 plus 1% on the value above $600,000.
- For properties valued between $1,000,000 and $2,999,999, the tax is $4,500 plus 1.65% on the value above $1,000,000.
- Additional tax brackets apply for higher-value properties, with tax rates scaling based on the land’s value.
South Australia
Latest Land Tax Information – South Australia (SA)
Exemption: Properties with a taxable land value below $833,000 are exempt from land tax.
$833,000 – $1,338,000: Taxed at $0.50 for every $100 (or part thereof) above $833,000.
$1,338,000 – $1,946,000: Tax is $2,525 plus $1.00 for every $100 above $1,338,000.
$1,946,000 – $3,116,000: Tax is $8,605 plus $2.00 for every $100 above $1,946,000.
$3,116,000 and above: Tax is $32,005 plus $2.40 for every $100 above $3,116,000.
Additional notes:
Surcharge: No additional surcharge applies.
Taxing date: Land tax is assessed as at midnight on 30 June each year.
Western Australia
Here is the latest information on land tax in Western Australia:
- Properties with a value of less than $300,000 are exempt from land tax.
- Properties valued between $300,001 and $420,000 incur a flat rate of $300.
- Properties valued between $420,000 and $1,000,000 must pay an additional $300 plus 0.25% of the value above $420,000.
Tasmania
As of the latest update, Tasmania’s land tax rates have changed to provide relief for property owners, especially those with lower-value properties. Here’s the breakdown.
- Exemption: Properties with a taxable land value up to $124,999 are exempt from land tax.
- $125,000 – $499,999: Land tax is $50 plus 0.45% of the value above $125,000.
- $500,000 and above: Land tax is $1,737.50 plus 1.5% of the value above $500,000.
Northern Territory
There is no land tax in the Northern Territory. While other Australian states and territories levy land tax on property owners, the Northern Territory does not impose such a tax.
Instead, the Northern Territory previously had a Property Activation Levy, but this was removed in 2022 for properties in the Darwin CBD.
Australia Capital Territory
The ACT assesses land tax on a quarterly basis rather than annually. As of 1 July 2024, the state imposes a fixed charge of $1,612. For land values, the following rates apply:
- Up to $150,000: A rate of 0.54% is applied to the unimproved value (AUV) of the property.
- Between $150,000 and $275,000: $810 plus 0.64% of the amount above $150,000 is owed.
- Between $275,001 and $1,000,000: $1,610 plus 1.24% of the amount above $275,000 is owed.
- Between $1,000,001 and $2,000,000: $10,600 plus 1.25% of the amount above $1,000,000 is owed.
- Over $2,000,000: $23,100 plus 1.26% of the amount above $2,000,000 is owed.
The land tax is assessed based on the average unimproved value (AUV) of the property over the past 5 years. This is then divided into four quarters, with the amount owed depending on the days in each quarter.
Other tax deductions are available for expats and overseas residents who own Australian property.
Capital Gains Tax (CGT) for Non-Residents
Capital Gains Tax (CGT) is levied on the profit made from selling a property, and this applies to non-residents as well. However, non-residents are subject to different rules than residents.
Key Points
- Non-Residents Are Taxed on Australian Assets Only: If you’re a non-resident, you will only be taxed on capital gains from Australian property. Non-residents are generally subject to CGT at the same rates as residents.
- CGT Discount: Non-residents are not eligible for the 50% CGT discount that residents can claim. 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. This means non-residents pay tax on the full capital gain.
- Tax Rates: The capital gain is taxed at the non-resident rate, which ranges from 19% to 45%, depending on your total taxable income.
Why It Matters
Selling a property in Australia as a non-resident can lead to significant tax obligations. Non-residents should carefully consider the potential CGT implications before deciding to sell.
Income Tax on Rental Income
If you’re renting out a property in Australia, you will need to pay income tax on the rental income you earn. For non-residents, the tax rules differ from those for Australian residents.
Key Points
- Tax Rate for Non-Residents: Non-residents are taxed at a flat rate of 30% on rental income. This is higher than the rate for residents, who may benefit from tax deductions and a progressive tax scale.
- Deductions: Non-residents can claim certain expenses, such as property management fees and maintenance costs, against their rental income. However, the rules on deductions for non-residents are more limited than for residents.
- Withholding Tax: If your rental income is paid to you overseas, the tax may be withheld at the time of payment, meaning you’ll need to file a tax return to ensure everything is handled correctly.
Why It Matters
The higher tax rate on rental income means non-residents could face a greater tax burden compared to Australian residents. You should account for this when calculating your potential rental returns.
Australian Non-Resident Tax Rates 2025-26
| Income Thresholds | Tax Rate | Tax Payable |
|---|---|---|
0 – $135,000 | 30% | 30c for each $1 |
$135,001 – $190,000 | 37% | $40,500 plus 37c for each $1 over $135,000 |
$190,001 and over | 45% | $60,850 plus 45c for each $1 over $190,000 |
Exemption for Owner-Occupied Properties
Non-residents are generally not allowed to buy properties to live in unless certain criteria are met. For example, non-residents may be permitted to buy a new property under the condition that they intend to live in it for a certain period. However, these rules are quite strict and may change over time.
Key Points
- New Property Exemption: Non-residents can usually buy new or off-the-plan properties, provided they meet FIRB requirements. Buying an established property for personal use is generally not allowed.
- FIRB Conditions: The Australian government often places specific conditions on property ownership by non-residents, such as selling the property after a certain period.
Why It Matters
As a non-resident, buying an owner-occupied property is typically more challenging. Ensure you meet all criteria to avoid penalties or forced sales.
Is Investing in Australian Property Worth It for Non-Residents?
Investing in Australian property can be lucrative, but it’s important to understand the various taxes and regulations that apply to non-residents. From higher stamp duty to land tax surcharges, non-residents face additional costs compared to Australian citizens and residents.
Before making any decisions, it’s highly recommended to consult with a tax professional or a property lawyer who specialises in foreign investment to ensure you are fully compliant with Australian tax laws.
By understanding these key property taxes, non-residents can make more informed decisions and avoid unexpected financial burdens down the road.
Ready to Navigate Property Taxes in Australia?
Understanding the complex tax landscape for non-residents can be overwhelming, but you don’t have to do it alone.
At Odin Tax, we specialise in helping non-residents like you navigate Australia’s property tax system with ease and confidence. Whether you’re looking to buy, rent out, or sell property, our expert advisors can guide you through every step, ensuring compliance and maximising your investment returns.
Contact Odin Tax today for personalised tax advice tailored to your unique situation, and let us simplify your property investment journey in Australia.
Australian Tax Support for Expats, Wherever You Live
Navigating Aussie tax rules from overseas? Our registered tax agents can explain what applies to you and what the ATO expects.
FAQs about Property Taxes for Non-Residents in Australia
How much is non-resident property tax in Australia?
In Australia, non-residents are subject to several property-related taxes, which include the following.
- Stamp Duty: Non-residents often face an additional surcharge on stamp duty. This surcharge can range between 7-9% in most states, including New South Wales and Victoria.
Land Tax: Non-residents may also be subject to land tax surcharges, typically around 2%, depending on the state. Some states like New South Wales and Victoria impose these surcharges on top of the regular land tax.
Capital Gains Tax (CGT): Non-residents are liable for capital gains tax on Australian properties, but they do not benefit from the 50% CGT discount available to residents.
Foreign Investment Review Board (FIRB) Application Fees: Non-residents must also apply for approval from the FIRB when purchasing property, with application fees depending on the property value.
These taxes and fees contribute to a higher overall tax burden for non-residents compared to Australian residents, especially in relation to property ownership and transactions.
What taxes do you pay in Australia?
In Australia, taxes depend on both the individual’s residency status and the type of income. The key taxes are:
- Income tax
- Medicare Levy
- Capital Gains Tax (CGT)
- Goods and Services Tax (GST)
- Fringe Benefits Tax (FBT)
- Stamp Duty
- Land Tax
Each of these taxes may have exemptions or deductions, depending on personal circumstances, residency status, and the specific tax type.
Who pays Land Tax in Australia?
Land tax is mandatory for all property owners in Australia unless the land is exempt due to being a primary residence, a farm, or used for charity purposes. Also, properties that fall below the tax threshold are exempt from paying land taxes.
It is important to note that there may be specific exemptions to land tax in your state, and it is best to check these details before making any assumptions.
Generally, the following are exempt from land tax:
- Your primary residence
- Agricultural land
- Land used for charitable purposes
- Land with a taxable value below the state’s threshold
How much tax do you pay when you buy a house in Australia?
The buyer must pay stamp duty and land tax when acquiring a property in Australia. Those who rent out their property must pay income tax, and capital gains tax is due upon selling the property.
Can I buy property in Australia if I am not a resident?
Yes, non-residents can buy property in Australia, but they must get approval from the Foreign Investment Review Board (FIRB).
Non-residents are generally limited to buying new properties or vacant land for development, while temporary residents can purchase one established dwelling to live in.
Additional taxes, such as the Foreign Investor Surcharge on stamp duty, apply, varying by state.
How much tax does a non-resident pay in Australia?
Non-resident property owners in Australia are subject to several taxes.
Stamp Duty
This tax is paid at the time of property purchase and varies by state or territory. Non-residents may face higher stamp duty rates than residents, depending on the state.
Income Tax on Rental Income
Non-residents must pay tax on any rental income generated from their Australian properties. They are taxed at the same rates as residents but do not benefit from the tax-free threshold.
As of 2024, the non-resident income tax rates are:
- $0 to $135,000: 30%
- $135,001 to $190,000: 37%
- Over $190,000: 45%
Capital Gains Tax (CGT)
Non-residents are required to pay capital gains tax on the sale of Australian property. They cannot claim the CGT discount available to residents, and the full capital gain is taxed.
Additionally, Foreign Resident Capital Gains Withholding (FRCGW) applies to all property sales from non-residents. Buyers must withhold 15% of the sale price as an upfront payment toward the CGT liability.
Do non-residents pay land tax in Australia?
Yes. Non-resident property owners in Australia are generally subject to land tax, with additional surcharges in several states.
- New South Wales (NSW): Non-residents must pay a 4% surcharge on residential land. This surcharge is calculated on the taxable value of the residential land they own. Exemptions may apply if the land is used for commercial purposes.
- Victoria: A 2% absentee owner surcharge applies to non-residents who own property in the state. The surcharge is added to the regular land tax payable based on the land’s taxable value.
- Queensland: Foreign owners who are considered absentee owners are subject to land tax if the value of their land exceeds $350,000, with a surcharge applied on top of the regular land tax.
These surcharges are added to the general land tax, which varies by state and is typically calculated based on the value of the property.
For specific rates and exemptions, it’s important for non-residents to consult with local state revenue offices or tax advisors to understand their obligations fully.
How much property tax do you pay in Australia?
Property tax in Australia typically refers to land tax and varies by state. Each state has its own land tax thresholds, rates, and surcharges. Here’s a general overview:
- Land Tax:
- Land tax is calculated based on the unimproved value of the land (excluding your primary residence).
- For example, in Victoria, land tax starts at AUD 275 for land valued between AUD 250,000 and AUD 600,000, with higher rates for more valuable land.
- In New South Wales, land tax starts at AUD 100 plus 1.6% on land values above AUD 849,000.
- Foreign Owner Surcharges: Non-residents or foreign owners may face additional surcharges, such as a 2% foreign surcharge in Victoria and New South Wales.
Tax rates and exemptions vary significantly by state, so it’s advisable to check with the local state revenue office for specific calculations.
