February 2025 – Hannah Phelps
Foreign Surcharge Duty Changes In 2025
What NSW Property Owners Need To Know
Effective 1 January 2025, significant tax changes impact foreign property investors in Australia, particularly in New South Wales (NSW).
Here’s what property owners and investors need to know about these substantial shifts in taxation:
Surcharge Purchase Duty Increase
The surcharge applied on top of standard stamp duty for foreign buyers has increased from 8% to 9%. This 1% rise adds significantly to the cost of purchasing property, especially for foreign investors, and will impact their overall investment calculations.
Foreign Resident Capital Gains Withholding
The withholding rate for foreign property sellers has risen from 12.5% to 15%. This ensures foreign investors comply with Australia’s capital gains tax obligations and means a larger portion of sale proceeds is held back for taxes.
Surcharge Land Tax in New South Wales
The annual surcharge land tax in NSW is now 5%, up from 4%. To be subject to this tax, individuals must be classified as foreign residents, meaning they are neither Australian citizens nor permanent residents and do not reside in Australia as their principal place of residence.
What This Means for You
These new tax measures aim to stabilise the property market, ensure fair competition for local buyers, and increase tax revenue. For foreign investors looking to purchase or sell property in NSW, careful financial planning and professional advice are now more important than ever.