Australian property investors can rejoice as three NSW duty taxes have been abolished. These changes will take effect from 1 July 2016 and will abolish mortgage duty on business mortgages, share transfer duty on unlisted securities (provided the company is not a landholder as defined in the Duties Act 1997) and transfer duty on non-real property business assets, such as goodwill. We expect this to result in more competitive lending. Foreign investors, however, will not share in the excitement, as the Budget changes will make it more challenging for them to invest in Australian property.
Foreign purchasers (who meet the definition of a "foreign person" under the Foreign Acquisitions and Takeovers Act 1975) will be liable to pay the following surcharges on top of the current rates:
- a stamp duty surcharge of 4% of the purchase price (effective immediately), and
- a land tax surcharge of 0.75% of the value of the land (effective 1 January 2017).
Foreign buyers will also have to pay stamp duty on off-the-plan purchases within three months and will no longer be entitled to the 12-month deferral.
These changes will increase stamp duty for foreign buyers; for example, a $1m purchase price will incur stamp duty of $80,510 (inclusive of the new surcharges) rather than $40,510.
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