Foreign buyers of Western Australia residential property will pay a 7% surcharge from January 1, 2019 as the government expects to raise about A$120m over the next four years.
Treasurer Ben Wyatt argued that it was “fair” for foreign owners of Western Australia real estate to pay a surcharge because they benefited from services and infrastructure. Last year, when the government first announced the surcharge, it believed the charge to foreign buyers would bring revenue of about A$21m in its first year.
Western Australia is now in line with other Australian states, all of which have introduced a foreign buyer surcharge. New South Wales charges foreign buyers an 8%, Victoria and South Australia charge 7%, and Queensland 3%.
Neighbouring New Zealand government has banned the sale of existing homes to foreign buyers, saying New Zealanders were sick of being “tenants in our own land”, as reported by International Investment.
The Western Australia real estate industry, fearful that foreign buyers might be turned off the local market.
“The WA property market is in the very early stages of recovery and, given foreign investment in the property market is integral to the success of the market and the wider Western Australia economy, we have strongly urged the government to reconsider the imposition of a tax that directly detracts from investment in Western Australia property,” chief executive Allison Hailes said.
The Real Estate Institute of Western Australia (REIWA) said the new tax would also impact people with foreign spouses.
“West Australians with foreign spouses who purchase a home together would also be affected by this surcharge, with 50% of the value of the property eligible for the seven per cent tax under the government’s proposed legislation,” president Hayden Groves said.
The charge will apply on the dutiable value of residential property purchased by foreigners and it will also capture corporations and trusts.
It will be applied on top of standard stamp duty payments.