Western Australia is the latest Australian state to propose a tax on overseas property investors.
Foreign buyers of Western Australia residential property will pay a 7 per cent surcharge from January 1, 2019 as the government expects to raise about A$120 million over the next four years.
Western Australia treasurer Ben Wyatt has argued that it is ‘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$21 million in its first year.
The Australian state will fall in line with other states, all of which have introduced a foreign buyer surcharge. New South Wales charges foreign buyers an 8 per cent, Victoria and South Australia charge 7 per cent, and Queensland 3 per cent.
However, the Western Australia real estate industry, are fearful that foreign buyers might be turned off the local market.
Chief executive Allison Hailes said: ‘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.’
President of the Real Estate Institute of Western Australia (REIWA), Hayden Groves, is also concerned that the new tax will impact Western Australians with foreign spouses.
He said: ‘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.’
The extra charge will be added to standard stamp duty payments. The charge will apply on the dutiable value of residential property purchased by foreigners and it will also capture corporations and trusts.