Stamp duty and land tax increases to hit foreign buyers of property in NSW

The measures are set to be announced by NSW Treasurer Gladys Berejiklian in her second budget on June 21.
Fairfax Media had foreshadowed the possibility of the moves after Ms Berejiklian refused to rule them out after similar surcharges were increased for foreign buyers in Victoria in April.

Victorian Treasurer Tim Pallas increased its existing stamp duty surcharge from 3 per cent to 7 per cent and a land tax surcharge for “absentee owners” from 0.5 per cent to 1.5 per cent.

In May, the NSW government announced buyers and sellers of real estate would have to prove their residency and citizenship status to the NSW government before a sale is completed.

Ms Berejiklian said the NSW stamp duty and land tax measures are expected to raise $1 billion for the government over the next four years.

However, she said it is expected the surcharges would not deter foreign investors, placing a question over whether they will improve housing affordability, particularly in Sydney.

“These new measures will ensure NSW’s property market continues to be an attractive destination for international investors while making sure that we are able to fund vital services into the future,” Ms Berejiklian said.

“The Victorian experience has demonstrated the measures have not had an adverse impact on the property market”.

The stamp duty surcharge will apply from the June 21 budget, while the land tax surcharge will take effect from January 1, 2017.

Epping MP Damien Tudehope had suggested last year a 20 per cent flat rate of stamp duty and higher land tax for foreign investors could improve housing affordability and benefit local buyers, many of whom were “not playing on a level playing field”.

The property industry is unlikely to welcome the announcement.