Australia is introducing a new tax on foreign owners of “under-utilised residential property”, as part of an effort to ensure that more homes are available to the marketplace.
In a statement, the Australian Tax Office said it was focusing on those properties owned by foreigners which were “not occupied or genuinely available on the rental market for at least six months per year”.
“The charge will be levied annually, and will be equivalent to the relevant foreign investment application fee imposed on the property at the time it was acquired by the foreign investor,” the ATO added. This would mean a charge of at least A$5,000 (US$3,700, £2,900).
“This measure is intended to encourage foreign owners of residential property to make their properties available for rent where they are not used as a residence, and so increase the number of dwellings available for Australians to live in.”
It said the measure will only apply to those “foreign persons” who make a foreign investment application for residential property from 7:30pm on 9 May.
Some unoccupied homes are likely to be double-taxed as a result, for example under the unoccupied property measures imposed by the state of Victoria, according to published reports.
The new tax is being brought in alongside a number of other measures in the latest budget aimed at cooling Australia’s over-heated property market, which is putting pressure on the country’s government. Other measures include an end to an exemption from capital gains tax for foreign and temporary tax residents who sell their main residence in Australia. (Existing properties will be grandfathered until 30 June 2019.)
The withholding rate on capital gains tax that foreigners must settle when they sell property will increase to 12.5% from 10% beginning on 1 July. Currently, the withholding tax is only taken when a foreigner sells a property worth $2m or more.
However, going forward, in an effort to raise more revenue and cool the market, it will now apply to the sale of properties worth A$750,000 or more, according to Your Investment Property magazine.
Source: Intetnational Investment