Understanding foreign purchaser additional duty

Key information

When you acquire property in Victoria, you may have to pay land transfer duty. 

If you are a foreign purchaser acquiring residential property, you may also have to pay foreign purchaser additional duty. 

Foreign purchaser additional duty applies to any arrangement or transaction involving a transfer of an interest in residential property to a foreign purchaser, including: 

• buying a residential property at auction or by private sale 
• buying a non-residential property with plans to convert it into residential property 
• receiving a residential property as a gift 
• certain leasing arrangements. 

Foreign purchasers 

You are a foreign purchaser if you are a: 

• foreign natural person 
• foreign corporation or 
• trustee of a foreign trust. 

Foreign natural persons 

You are a foreign natural person if you: 

• are not an Australian citizen 
• do not hold an Australian permanent residence visa 
• are not a New Zealand citizen who ordinarily resides in Australia for 6 consecutive months within the 12 months before or after settlement of the transfer or relevant acquisition.  

If you have applied for a visa but haven’t received it yet, you are still a foreign natural person. 

Foreign corporations 

This means a corporation incorporated: 

• outside Australia, or 
• in Australia if a foreign natural person, another foreign corporation or a trustee of a foreign trust has a controlling interest in it. 

Foreign trusts 

A foreign trust is a trust where a:  

• foreign natural person 
• foreign corporation or  
• trustee of another foreign trust 

has a substantial interest in the trust estate of that trust.

Residential property 

Residential property is land that can be legally used solely or primarily for residential purposes. It includes houses, townhouses, units, flats and duplexes. 

It also includes land or a part of land: 

• with a building someone intends to refurbish or extend for residential use 
• where someone plans to build a building for residential use. 

Residential property does not include commercial residential premises, residential care facilities, supported residential services or retirement villages. 

Dual-purpose properties 

A property can be used for both residential and commercial purposes. If it is primarily used for residential purposes, it is a residential property. 

Foreign purchaser additional duty applies to the part of the property’s dutiable value represented by the foreign purchaser’s share in the whole property, including the non-residential part. 

Converting a property

If you are a foreign purchaser who acquires non-residential property that you plan to convert into residential property, foreign purchaser additional duty applies. 

If you acquire non-residential property and later plan to convert it into residential property, you must write to us within 14 days of forming that intention. 

You cannot claim a refund if the residential premises is not built.

Calculating foreign purchaser additional duty 

The foreign purchaser additional duty rate is 8%. It applies to transactions arising from an agreement or arrangement entered into on or after 1 July 2019. 

Foreign purchaser additional duty is calculated on the dutiable value of your share of the residential property, excluding any concessions. The dutiable value is the greater of the price you pay for the property and the unencumbered value of the property. 

If a transfer of land is exempt from land transfer duty, it is also exempt from foreign purchaser additional duty. 

To calculate your total duty: 

1. Calculate your land transfer duty the normal way, applying any relevant concessions. 
2. Calculate your foreign purchaser additional duty on the dutiable value of the property, excluding any concessions. 
3. Add the 2 amounts together. 

Read more about calculating foreign purchaser additional duty.

Landholders 

When a foreign purchaser makes a relevant acquisition in a landholder, foreign purchaser additional duty only applies to the residential share of the landholdings of the landholder. 

Nominations and sub-sale events

Foreign purchaser additional duty applies when a foreign purchaser is nominated to be the transferee of residential property and that nomination constitutes a sub-sale event. 

When someone is nominated to be the transferee of property under an off-the-plan contract, it will trigger a sub-sale event. This is because there has been land development. Land transfer duty is generally only charged on the transfer to the nominated person. So when a foreign purchaser is nominated to take a transfer of residential property under an off-the-plan contract, foreign purchaser additional duty applies. 

Foreign purchaser buying with a non-foreign purchaser 

If a foreign purchaser buys with a non-foreign purchaser, duty only applies to the interest in the property acquired by the foreign purchaser. 

Notify us

Anyone who acquires land in Victoria must submit a Digital Duties Form. They must submit the form even if the transaction is exempt from duty and no matter who the buyer is or what type of property it is. 

If you are a foreign purchaser, you must tell us in your Digital Duties Form. 

To lodge the Digital Duties Form: 

• vendor and purchaser representatives must be registered for Duties Online to process the form 
• self-represented parties must register and lodge via our public system. 

If you don’t tell us you are a foreign purchaser, penalties and interest may apply.