Buying Property in Victoria as a Non-Resident: Stamp Duty, Surcharges and Other Taxes
If you are not an Australian citizen or permanent resident, buying property in Victoria comes with extra taxes and extra paperwork. The rules sit across both Victorian law and Commonwealth law, and the two systems talk to each other, so it is important to understand both sides before you sign a contract.
This page walks through how Victoria treats “foreign purchasers” for stamp duty and land tax, how the Federal Government treats foreign buyers under the Foreign Acquisitions and Takeovers Act 1975 (Cth), and the extra vacancy fees that can apply if the property is left empty.
1. Who is a “foreign purchaser” in Victoria
In Victoria, foreign purchaser rules are set under the Duties Act 2000 (Vic) and the Land Tax Act 2005 (Vic). The State Revenue Office (SRO) applies these rules.
Broadly, you are treated as a foreign purchaser if you are:
An individual who is not an Australian citizen, not a permanent resident, and not a New Zealand citizen with a special category visa who has been in Australia long enough to qualify, or
A corporation controlled by foreign persons, or
A trust where a substantial interest is held by foreign persons.
Importantly, it is the status at the time of the transaction that matters. If you are on a temporary visa at the time you sign the contract, the SRO will generally treat you as a foreign person, even if you later become a permanent resident.
There are special rules for “mixed” situations, such as:
A foreign person buying jointly with an Australian citizen spouse or partner
A foreign person holding units or shares in an entity that buys the property
Trusts where some beneficiaries are foreign and some are not.
These cases need to be worked through carefully against the SRO’s foreign purchaser rules and the detail in the Duties Act 2000 (Vic) and Land Tax Act 2005 (Vic).
2. Victorian stamp duty and the foreign purchaser additional duty
All purchasers of Victorian property pay stamp duty under the Duties Act 2000 (Vic). The duty is calculated on the “dutiable value” of the property, usually the price you pay, subject to any concessions or exemptions.
If you are a foreign purchaser, Victoria then adds an extra charge called foreign purchaser additional duty. This surcharge is applied on top of the ordinary duty and is collected at the same time, through the State Revenue Office, when the property is transferred into your name.
The key features are:
It only applies to certain types of property, mainly residential land or land that is intended to become residential
It is calculated as a percentage of the dutiable value, in addition to the normal duty scale
It is assessed and collected by the SRO as part of the electronic duties process when your conveyancer or solicitor submits the Digital Duties Form.
Because the surcharge is a percentage of the purchase price, even a modest unit in Melbourne can attract a significant amount of additional duty for a foreign purchaser. Purchasers should budget for this at the start and obtain up to date figures based on the current SRO rates.
3. Land tax and the foreign owner surcharge
Separate from stamp duty is Victorian land tax. This is an annual tax assessed under the Land Tax Act 2005 (Vic) on the taxable value of land you own in Victoria as at 31 December each year.
For foreign owners, Victoria applies an extra foreign owner land tax surcharge on certain types of residential land. Key points include:
The surcharge is in addition to ordinary land tax
It is calculated each year on the total taxable value of relevant landholdings
The definitions of “foreign owner” for land tax purposes are similar, but not identical, to the foreign purchaser definitions for stamp duty.
If you are a foreign purchaser intending to hold Victorian residential property as an investment, this annual surcharge can materially affect your long term holding costs. It is important to factor this into your cash flow, not just look at the stamp duty at settlement.
4. The Residential Land Acquisition Statement
When you buy residential land in Victoria, the SRO requires a Residential Land Acquisition Statement as part of the Digital Duties Form process. This requirement applies whether or not you are a foreign purchaser.
If you are foreign, the form is used to:
Confirm your residency and visa status
Identify whether you are buying with an Australian citizen or permanent resident
Determine whether foreign purchaser additional duty applies and at what rate.
If you are buying jointly with an Australian spouse or partner, or using a corporate or trust structure, the SRO will assess the foreign status of each party and may still apply the surcharge depending on the share of foreign ownership and the way the interest is held.
5. Federal law and FIRB approval
In addition to Victorian stamp duty, foreign purchasers must also navigate the Federal foreign investment rules under the Foreign Acquisitions and Takeovers Act 1975 (Cth) and the associated regulations. These are administered by the Foreign Investment Review Board (FIRB) and the Australian Taxation Office (ATO).
In simple terms:
A “foreign person” under the Act must generally obtain FIRB approval before acquiring an interest in Australian residential land
Contracts for residential property usually need to be made “subject to FIRB approval” or the buyer must obtain approval before signing
FIRB approval comes with an application fee which increases according to the value of the property and the type of asset being acquired.
The definition of “foreign person” under Commonwealth law is not identical to the Victorian foreign purchaser definitions, so it is possible to be captured by one regime and not the other. That is why both sides need to be checked carefully.
Breach of the FIRB rules can lead to serious consequences, including forced sale of the property and significant civil penalties. Buyers should make sure that the contract is structured correctly around FIRB conditions and timeframes.
6. Vacancy fees for foreign owners
The Federal regime also includes an annual vacancy fee for foreign owners of residential property. This sits under the same Commonwealth legislation and is administered by the ATO.
In broad terms:
If a foreign person owns a residential property and it is not occupied or genuinely available for rent for at least 183 days in a year, a vacancy fee can be charged
The amount of the vacancy fee is generally based on the initial FIRB approval fee for that property
The fee is assessed each year while the property remains foreign owned and is subject to the vacancy rules.
Foreign owners must lodge annual vacancy fee returns with the ATO. Failure to lodge the return or pay the fee can lead to penalties and enforcement action.
7. Mixed situations and common scenarios
In practice, many real life situations are not straightforward. Some common examples include:
Foreign buyer with Australian citizen spouse
A foreign national buying jointly with an Australian citizen spouse may still trigger Victorian foreign purchaser additional duty depending on how the title is held and how the SRO views the transaction under the Duties Act 2000 (Vic). At a federal level, FIRB approval is often still required, because the test looks at whether any foreign person is acquiring an interest.
Temporary visa holders
Buyers on student visas, temporary skilled visas or other temporary visas are very often treated as foreign persons for both Victorian duty and FIRB purposes. They may be required to obtain FIRB approval and pay both the foreign purchaser additional duty and the vacancy fee if the property is not occupied or rented as required.
Company or trust purchases
Where a company or trust buys the property, the foreign purchaser test looks through to the persons who control the entity or who are able to benefit from the trust. If foreign persons hold significant interests, the company or trustee can be treated as a foreign purchaser under the Duties Act 2000 (Vic) and as a foreign person under the Foreign Acquisitions and Takeovers Act 1975 (Cth).
8. Practical tips for non-resident buyers in Victoria
If you are not a citizen or permanent resident, it is sensible to work through the tax and surcharge issues before you sign a contract. Some practical steps are:
Confirm your residency and visa status based on both Victorian and Commonwealth definitions
Obtain an estimate of Victorian duty and any foreign purchaser additional duty at the current rate, using the purchase price you have in mind
Check whether you will be subject to the foreign owner land tax surcharge and factor the annual cost into your budget
Work out whether FIRB approval is required and what the application fee will be at your price point
Make sure your contract is drafted to deal with FIRB approval timeframes and any conditions
Consider whether the property will be occupied or rented out for at least 183 days each year to avoid an ATO vacancy fee.
For buyers who are planning to live in the property and later apply for permanent residency, these issues can still arise in the early years, so it is worth understanding the cash flow impact ahead of time.
9. How Victorian Property Settlements can assist
As explained by David Dawn, Licensed Conveyancer at Victorian Property Settlements, the key with foreign purchaser rules is to line up the Victorian duty position, the Victorian land tax position and the federal FIRB and vacancy fee position before you commit yourself to a contract.
We can help you:
Check how the foreign purchaser rules under the Duties Act 2000 (Vic) and Land Tax Act 2005 (Vic) apply to your situation
Work with your accountant or migration adviser so that FIRB, duty and land tax are all considered together
Draft contracts for Victorian purchases that properly deal with FIRB conditions and SRO requirements
Coordinate the State Revenue Office forms and settlement process so that duty and any surcharges are correctly assessed.
The information on this page is general and does not take into account your specific circumstances. Before acting, you should obtain tailored advice from appropriate professionals, including taxation and migration advisers, about how the Duties Act 2000 (Vic), Land Tax Act 2005 (Vic) and Foreign Acquisitions and Takeovers Act 1975 (Cth) apply to your situation.
If you are thinking about buying in Victoria as a non-resident, you can contact Victorian Property Settlements on 03 9783 0111 or visit www.victorianpropertysettlements.com.au to discuss how we can help you structure your purchase and settle smoothly.