Why foreign investors should consider Western Australia - Ironfish

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Why foreign investors should consider Western Australia

The Western Australian Government has announced plans to increase the state’s Foreign Buyers Surcharge for residential property.

In September last year, the Western Australian Government announced a 4% foreign purchaser duty to be introduced on 1 January 2019.

However, in the State budget delivered last month, WA Treasurer Ben Wyatt announced that foreign investors of residential property in the state would in fact be subject to a surcharge of 7% as of 1 January 2019.

The Government says the measure will put Western Australia on par with New South Wales, Victoria, South Australia and Queensland which all impose a foreign purchaser duty – although the scope and rates vary from state to state.

The increased Foreign Buyers Surcharge is expected to raise an additional $50 million over the period to 2021 – 2022.

However, the surcharge will exclude residential developments with 10 or more lots, so it will not impact medium and high-density development which keeps the economy ticking.

This exception also offers a substantial opportunity for foreign investors to invest in a development with 10 or more lots in Western Australia – compared with the other 5 major states.

Foreign Buyers Surcharge scenario – development with 10 or more lots

Unit purchase price: $500,000

  Sydney Melbourne Brisbane Adelaide Perth 
Additional FIRB duty payable  

$40,000

 

$35,000

 

$15,000

 

$35,000

 

$0

The surcharge is also expected to exclude: 

  • Commercial residential premises, such as student accommodation and retirement villages, and
  • Mixed use premises used primarily for commercial purposes.

The announcement comes off the back of increasingly positive signs for the Perth property market with many commentators, including Channel 7 Chairman and business magnate Kerry Stokes suggesting that now is the best time to buy.

Earlier this year, the Queensland Government announced it would be increasing their state’s ‘Foreign Acquirer Duty’ for foreign property investors from 3% to 7% from 1 July 2018.

This leaves Perth as the only city out of the 5 largest Australian cities without an additional duty for foreign investors of residential property – at least for the next 6 months.

Additional duty currently payable in each state

  NSW VIC QLD SA WA
Surcharge 8% 7% 3% 7% 0%

If you would like more information about the new tax or about property investment in Perth and Western Australia please feel free to book a free appointment directly with your local Ironfish Strategist.