market-insights
Foreign Buyer Rules and Surcharges Australia — 2025-26 Comprehensive Guide
Foreign buyer acquisition of Australian residential property sits on two regulatory layers: a federal layer (Foreign Investment Review Board approval + Treasury policy on which property types are open to foreign acquisition) and a state layer (stamp duty surcharges + land tax surcharges, set independently by each jurisdiction). The combined cost overhead on a foreign-buyer acquisition typically adds 8–12% to the total transaction cost versus an Australian resident equivalent, and recurring annual land tax can add 2–4% per year thereafter.
This article aggregates both layers across the 8 Australian jurisdictions plus the federal regime, with the total cost impact on a $1,000,000 residential acquisition.
Who counts as a "foreign person"?
Under the Foreign Acquisitions and Takeovers Act 1975 (Cth) (FATA), the definition of "foreign person" is broader than non-citizens. The category covers:
- Non-resident individuals — any individual who is not ordinarily resident in Australia
- Australian permanent residents (PR) — generally NOT foreign persons for FIRB purposes IF ordinarily resident in Australia (i.e. physically present for at least 200 days in the preceding 12 months)
- Temporary visa holders — generally treated as foreign persons regardless of residency, with limited carve-outs for principal place of residence acquisitions
- Foreign-controlled corporations and trusts — Australian-registered entities can still be "foreign persons" if a foreign person holds 20%+ interest (single) or 40%+ interest (aggregate)
- Foreign governments and government investors — separate regulatory category with stricter thresholds
The practical implication: an Australian PR who has been living and working overseas for more than 200 days is treated as a foreign person for the duration of that absence. Returning to Australia ahead of an acquisition can sometimes resolve the status — verify with FIRB and an immigration lawyer before structuring the transaction.
State-level surcharge definitions of "foreign purchaser" are similar but not identical to FATA — each state revenue office publishes its own test. NSW's Surcharge Purchaser Duty test, for example, uses an "absentee owner" concept that picks up slightly different categories than FATA. For multi-jurisdiction acquisitions, run the test for each state independently.
The federal layer — FIRB + the established dwellings ban
Foreign Investment Review Board (FIRB) approval
Most residential property acquisitions by foreign persons require Foreign Investment Review Board approval before settlement. The application fee scales with the property value and the type of acquisition (new vs established).
The approval process is administered by the Treasury's Foreign Investment Division (the FIRB itself is the advisory board to the Treasurer). For most residential acquisitions, decisions are issued within 30 days of fee receipt. The application should be lodged BEFORE entering into a contract, although contracts conditional on FIRB approval (with a specific subject-to-approval clause) are accepted.
What counts as "new" vs "established"?
The distinction matters because it determines (a) whether the established-dwellings ban applies, and (b) which FIRB fee schedule applies.
- New dwelling — a dwelling that has not previously been sold as a dwelling and has either never been occupied OR has been occupied for less than 12 months in total since construction, where the construction completed within the previous 12 months. Off-the-plan purchases qualify as new.
- Established dwelling — any dwelling not meeting the "new" definition. The vast majority of resale residential property falls here.
- Vacant residential land — treated as a separate category; foreign acquisition is generally permitted subject to a "build within 4 years" condition.
- Build-to-rent (BTR) investment — a specific carve-out from the ban, subject to minimum dwelling count (typically 50+), a 15-year holding requirement, and dedicated rental management arrangements.
The "12 months / never occupied" definition is a frequent trap: developer-marketed "new" stock that has sat as a display home for more than 12 months can technically lose its "new" status, requiring established-dwellings analysis even on what looks like a new acquisition.
Temporary ban on foreign-purchased established dwellings (2025-2027)
In April 2025 the federal government implemented a temporary 2-year ban on most foreign persons buying established (existing) residential dwellings, in force from 1 April 2025 to 31 March 2027. The ban does not apply to:
- New dwellings (new construction, off-the-plan)
- Build-to-rent investment
- Refugee and special humanitarian visa holders
- Some temporary visa holders for their principal place of residence
This is materially the most consequential federal change to foreign buyer rules in two decades and has reshaped the practical pool of acquirable stock for non-resident investors.
Source: Treasury — Foreign investment in residential real estate.
State stamp duty surcharges (one-off, paid at purchase)
| Jurisdiction | Foreign purchaser surcharge | Status |
|---|---|---|
| New South Wales | 8% of dutiable value | Surcharge Purchaser Duty (since 21 June 2016) |
| Victoria | 8% | Foreign Purchaser Additional Duty |
| Queensland | 8% (AFAD — Additional Foreign Acquirer Duty) | Confirmed via QRO |
| Western Australia | 7% (Foreign Buyers Duty) | Residential property |
| South Australia | 7% (Foreign Ownership Surcharge) | Verify with RevenueSA |
| Tasmania | 8% (FIDS — Foreign Investor Duty Surcharge) | Residential property |
| Australian Capital Territory | 0% — no foreign purchaser stamp duty surcharge | Verify |
| Northern Territory | 0% — explicitly no foreign buyer surcharge | Confirmed |
State land tax surcharges (annual, recurring)
| Jurisdiction | Foreign land tax surcharge | Threshold |
|---|---|---|
| New South Wales | 4% (Surcharge Land Tax) | No threshold |
| Victoria | 4% (Absentee Owner Surcharge) | Applies above general LT threshold |
| Queensland | 2% (foreign) / 3% (absentee) | $350,000 absentee threshold |
| Western Australia | None on land tax (verify) | n/a |
| South Australia | Surcharge applies — verify rate | n/a |
| Tasmania | 2% (FILTS — Foreign Investor Land Tax Surcharge) | No threshold |
| Australian Capital Territory | 0.75% of AUV | No threshold |
| Northern Territory | n/a — no general land tax | n/a |
Total cost impact — $1,000,000 residential acquisition by a foreign buyer
For comparison, the cross-state stamp duty article computed standard (resident) duty at $1M across all jurisdictions. Adding the foreign purchaser surcharge:
| Jurisdiction | Standard duty (resident) | Foreign surcharge (8% or 7%) | Total at purchase | Year 1 LT surcharge |
|---|---|---|---|---|
| NSW | $39,412 | + $80,000 (8%) | $119,412 | + $40,000 (4% on $1M residential, no threshold) |
| VIC | $55,000 | + $80,000 (8%) | $135,000 | + $40,000 (4%) |
| QLD | $38,025 | + $80,000 (8%) | $118,025 | + $20,000 (2%) |
| WA | $42,615 | + $70,000 (7%) | $112,615 | n/a explicit foreign LT surcharge |
| SA | ~$48,830 | + $70,000 (7%) | $118,830 | Verify |
| TAS | ~$40,185 | + $80,000 (8%) | $120,185 | + $20,000 (2%) |
| ACT | $30,500–$35,238 | + $0 | $30,500–$35,238 | + $7,500 (0.75% on $1M AUV) + standard ACT LT |
| NT | $49,500 | + $0 | $49,500 | $0 (no NT general land tax) |
Headline: the foreign cost-overhead on a $1M residential acquisition ranges from $0 (ACT, NT) to $80,000 (NSW, VIC, QLD, TAS at 8%). Recurring foreign land tax surcharges add $0 to $40,000+ per year thereafter — making the long-term holding cost differential between jurisdictions far larger than the one-off transaction differential.
Practical implications
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The ACT and NT are now the only Australian jurisdictions with no foreign stamp duty surcharge — meaningful for foreign buyers structuring acquisitions during the 2025-2027 established-dwellings ban window.
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The established-dwellings ban (April 2025 – March 2027) channels foreign demand into new builds — combined with the WA First Home Owner Rate of Duty changes (also from 21 March 2025) and the housing supply package in the 2026-27 Budget, the policy framework is explicitly pushing foreign investment toward new housing supply.
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Recurring land tax surcharges compound the long-term cost differential. A foreign owner of a $1M Sydney residential investment property pays approximately $40,000/year in surcharge land tax alone, on top of standard land tax and standard income tax on rental yield — an effective annual recurring tax cost of ~5-6% before federal income tax.
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CGT 2027 reform doesn’t change foreign buyer rules directly, but the new 30% minimum effective rate on post-2027 gains plus the 50% discount replacement does affect non-resident investors selling Australian property after 1 July 2027. See our 1 July 2027 CGT flagship.
Penalties for non-compliance
The federal regime has hard teeth. Acquiring a residential property without required FIRB approval can attract:
- Civil penalties — up to the greater of the capital gain made on the property or 25% of the property's market value (or consideration paid), payable by the foreign person
- Divestiture orders — the Treasurer can compel sale of the property, generally on a short timetable, with no protection on price achieved
- Criminal penalties — for wilful breach, fines and (rarely) custodial sentences under FATA
- Adviser exposure — solicitors, conveyancers, and real estate agents who facilitate a breach can face separate enforcement under state professional standards regimes
State-level surcharge non-compliance follows a similar pattern: unpaid surcharge accrues interest and penalty tax, and persistent non-payment can result in caveats lodged against title by the state revenue office.
In practice, the federal civil-penalty regime is enforced — the Treasury publishes outcomes annually. Foreign buyer compliance is one of the better-resourced enforcement programs in Australian property tax, and the cost of getting it wrong typically exceeds the cost of doing it right by an order of magnitude.
Where independent valuation fits in
Foreign-buyer transactions almost always need an independent market valuation at one or more points:
- Pre-acquisition due diligence — independent valuation to confirm that the asking price reflects market, given that foreign-buyer-specific pricing pressure (off-the-plan premium, foreign-targeted marketing) can push asking prices above defensible market value
- FIRB application supporting evidence — for larger acquisitions or unusual asset types, FIRB may request a supporting market valuation as evidence of the acquisition value
- Stamp duty surcharge calculation base — the dutiable value for surcharge purposes is the greater of contract price and market value; an independent valuation is the standard evidence for related-party or non-arm's-length acquisitions
- Annual land tax surcharge valuation — state-level recurring land tax surcharges are assessed on land value as published by the Valuer-General, but appeals or objections often require an independent comparable land valuation
- Post-acquisition restructure / trust setup — if the foreign person restructures into a discretionary trust or company post-acquisition, a contemporaneous valuation supports the cost base for the new holding entity
- Eventual disposal — for non-resident sellers, the 2026-27 CGT reform increases the value of having a clean acquisition-date market valuation on file for cost-base purposes
For Landmark's purposes, the most common foreign-buyer engagements are pre-acquisition due-diligence valuations on new high-rise apartment stock in Melbourne, Sydney, and Brisbane CBD, and contemporaneous valuations supporting trust-restructure planning by foreign-controlled investment vehicles.
Strategic considerations for the 2026-2027 window
For foreign buyers actively considering Australian residential acquisition in the next 12-24 months:
- The established-dwellings ban expires 31 March 2027 — if the policy is not extended, established stock re-opens to foreign acquisition from April 2027. Build a contingency timetable around both scenarios (extension vs sunset).
- New-build pipeline is the only domestic path during the ban — off-the-plan apartment stock in capital city CBDs is the practical universe of acquirable assets. Pre-acquisition valuation is particularly important here given off-the-plan pricing risk.
- ACT and NT remain the lowest-surcharge jurisdictions — for purely tax-cost-minimisation strategies, a meaningful subset of foreign buyers are now considering these markets despite their smaller scale.
- CGT 2027 reset interaction — non-resident sellers disposing after 1 July 2027 face the new indexation regime on post-2027 gain. For acquisitions made now (2026), the holding-period sensitivity to the reset is significant; consider commissioning an acquisition-date valuation that establishes a clean cost base on the title history.
- Land tax surcharge cost compounds — for buy-and-hold strategies, the annual surcharge differential between low-surcharge and high-surcharge jurisdictions can exceed the one-off stamp duty differential within 2-3 years. Sydney and Melbourne are 4%/year recurring; ACT is 0.75%/year recurring. Over 10 years, this is the dominant cost driver.
Methodology
Federal data sourced from Treasury and the Foreign Investment Review Board policy publications. State surcharge data aggregated from each state revenue office's foreign purchaser / absentee owner pages, cross-checked against the Stamp Duty Rates by State Australia — 2025-26 article and the Land Tax by State Australia — 2025 article.
Total cost figures are illustrative calculations on a $1,000,000 acquisition and assume the foreign buyer purchases residential land. Specific cases (off-the-plan, build-to-rent, refugee/humanitarian status) may attract different treatment — verify with the relevant revenue office and FIRB.
Sources
- Treasury — Foreign investment in residential real estate
- FIRB — Application fees and approvals
- Revenue NSW — Surcharge purchaser duty
- SRO Victoria — Foreign purchaser additional duty
- QRO — Additional foreign acquirer duty (AFAD)
- RevenueWA — Foreign buyers duty
- SRO Tasmania — Foreign Investor Duty Surcharge
- ACT Revenue Office — Foreign ownership surcharge
See also
- Stamp Duty Rates by State Australia — 2025-26 Comprehensive Data
- Land Tax by State Australia — 2025 Thresholds, Rates & Foreign Surcharges
- Capital Gains Tax Property Valuation — flagship — for foreign sellers after 1 July 2027
Last verified: 27 May 2026. Foreign investment regulation is the most actively-revised area of Australian property tax — verify the current treatment with FIRB and the relevant state revenue office before transacting. For independent valuations supporting foreign acquisition compliance, request a quote.