If you’re a non-citizen or non-resident looking to buy property in Western Australia, there’s an extra cost you need to be aware of: Foreign Buyer Duty. This additional charge can make a significant difference to your overall budget, so it’s essential to understand how it works.
What Is Foreign Buyer Duty?
Foreign Buyer Duty is an extra stamp duty that applies to non-citizens and non-residents purchasing residential property in WA. This duty is currently set at 7% of the property’s purchase price. For example, if you’re buying a home worth $1,000,000, you’ll need to pay an additional $70,000 on top of the regular stamp duty.
Who Needs to Pay?
This duty applies to anyone who isn’t an Australian citizen, a permanent resident, or a New Zealand citizen holding a special category visa. Even if you’re buying a property with others, only the share of the purchase held by foreign buyers will attract the 7% duty.
How It Works in a Joint Purchase
If you’re buying a property with someone else and one of you is subject to Foreign Buyer Duty, only that person’s share of the property will be taxed at the 7% rate. For instance, if two people are buying a property together and only one is a foreign buyer, then only that person’s portion of the property value will incur the additional duty.
Don’t Forget the Paperwork!
Whether you’re a foreign buyer or not, all buyers in WA must complete a declaration to confirm whether the Foreign Buyer Duty applies. This means you’ll see a five-page form in your settlement documents, which is a necessary part of the process.
Why Does This Duty Exist?
Foreign Buyer Duty was introduced to ensure that foreign buyers contribute to the infrastructure and services that support property markets. It’s a way of leveling the playing field for local buyers who may be competing in a tight property market.
Got Questions?
We know this can be a bit confusing, especially if it’s your first time buying property in WA. If you have any questions about Foreign Buyer Duty, feel free to reach out to us at Hanson Property Settlements, or drop a comment below. We’re here to help clear up any confusion!