12/12/22

AUSTRALIA: Stamp duty, foreign tax slap overseas buyers in Perth.

As published on yourinvestmentpropertymag.com.au, Monday 12 December, 2022.

Overseas workers are being discouraged from buying in Western Australia due to the high costs of property taxes.

Resolve Property Solutions buyers agent Peter Gavalas said federal and state policies are disincentivising foreign workers from moving to the state.

“The minute I tell them about the additional stamp duty that foreign buyers get charged and the Foreign Investment Review Board (FIRB) application fees, they’re shocked and often say they can’t afford to buy,” he said.

“Naturally, some decide to rent instead, but others give up on Western Australia altogether and decide to migrate to another Australian state.”

Foreign buyers in Western Australia who are planning to buy an owner-occupied property must pay around 7% extra in stamp duty and apply to FIRB and settle a fee of around $13,200 for properties valued between $75,000 to $1m.

An overseas worker who buys a $600,000 property will face an additional bill of $78,715, consisting of $23,515 in regular stamp duty charges, $42,000 in foreign buyer stamp duty charges and $13,200 in FIRB fees.

“I’d love to see the federal government show some more flexibility over FIRB, but it’s probably a bit much to expect them to change a national policy just for Western Australia,” Mr Gavalas said.

“However, stamp duty is a state tax, so the West Australian government can absolutely reduce or eliminate foreign transfer duty.”

Mr Gavalas said the state’s unemployment rate of 3.5% indicates that it is “desperate” for workers and making it easier for them to move to Western Australia would be a good boost to the economy.

“We also want to give migrants the opportunity to buy, rather than rent, because the vacancy rate in Perth is a frighteningly low 0.4%. With only four out of every 1,000 rental properties lying vacant right now, the last thing we want to do is increase tenant competition,” he said.

In August, the state government announced changes to its migration policies to ensure that Western Australia is the state of choice for skilled workers migrating to the country.

The changes include waiving the $200 application fee and reducing the requirement to have an employment contract to six months. Requirements for applicants to demonstrate sufficient funds were also relaxed.