Foreigners could face higher state taxes to buy property in NSW

Taxes imposed on foreign investors buying up property in NSW could be included in the next budget, Premier Chris Minns has revealed.

Taxes imposed on foreign investors buying up property in NSW could be included in the next budget, Premier Chris Minns said on Wednesday.

This comes after the Daily Telegraph revealed NSW Treasurer Daniel Mookhey was looking at increasing the foreign tax surcharge as well as closing loopholes which allowed temporary residents to buy dwellings and leave them empty.

Mr Minns said any details about the amount of tax increased would be included in the budget should the government decide to go ahead with the plan.

“If we make a decision about a foreign investor surcharge as part of the NSW budget, we would include all that information about inbound revenue as well as the effects of making more properties available for young Australians in particular,” he said..

“Like any budget measure the government will go through its due diligence and collect policy papers as well as examine and speak to experts in the field.”

NSW Premier Chris Minns. Picture: NCA NewsWire/ Gaye Gerard

NSW Treasurer Daniel Mookhey. Picture: Justin Lloyd

Despite saying the government would look into the tax increase Mr Minns said he had yet to commit to the policy change.

“We need to investigate all measures to boost housing supply and give opportunities to young people to have a place to live in NSW and Sydney.. And part of that policy mix is a foreign investor surcharge,” he said.

Earlier, The Daily Telegraph revealed the state government was looking at whacking foreigners more to buy property in NSW, with Treasurer Daniel Mookhey declaring money from overseas investors should be directed to help “build new homes”.

Mr Mookhey said the state government is considering changing taxes the state levies on overseas buyers, which could see foreigners pay more to buy property here.

“We want overseas investors to help us build more homes and pay their fair share towards that goal,” Mr Mookhey told the Telegraph.

The state government currently slugs foreign buyers more than locals on stamp duty and land tax for property purchases.

Those taxes were introduced in 2016 and have so far raised $2.65 billion, including $1.12bn raised in extra stamp duty charged to foreign buyers.

NSW charges foreigners an extra eight per cent in “surcharge purchaser duty” on homes. Picture: Tim hunter.

The revenue came from 14,550 transactions which incurred the “surcharge purchaser duty” imposed in addition to local stamp duty.

The “surcharge purchaser duty” currently taxes foreign investors an extra eight per cent of the total property cost.

Chinese nationals accounted for the lion’s share of that revenue, raising almost $635 million.

Buyers from Hong Kong were next ($84m) followed by Vietnam ($39.4m).

Mr Mookhey is being urged to hike that tax in line with a similar policy in Ontario, Canada.

Ontario’s government charges foreign investors an extra 25 per cent on top of the property purchase price.

Non-resident foreign investors are usually prohibited from buying existing homes, but can buy new builds — with extra taxes. Picture: Sam Ruttyn

The policy, introduced in 2017, has been so popular that other Canadian jurisdictions are looking to copy the tax.

An Ontario government spokesman said the “Non-Resident Speculation Tax” was designed to tackle the local housing crisis by prioritising local families and homebuyers.

In NSW, former Premier Dominic Perrottet doubled taxes on foreign investors in 2017.

Liberal Treasury spokesman Damien Tudehope called on Mr Mookhey to consider hiking the tax again to address the housing crisis.

Liberal Treasury spokesman Damien Tudehope urged Mr Mookhey to consider reviewing taxes on foreign buyers. Picture: NCA NewsWire / Nikki Short

“Rates should be regularly reviewed. As it is seven years since the surcharge on duty was raised in 2017 – which had an immediate effect of lowering house price growth – active consideration should be given to a further rise,” he said.

Mr Mookhey said he is looking at the tax policies of states like Victoria and Queensland when considering any changes.

Victoria charges foreign buyers an extra eight per cent on top of a property purchase price, like NSW.

Foreigners are also slugged extra land tax in NSW – this surcharge has raised $1.53bn since 2016.

Former Premier Dominic Perrottet doubled the NSW foreign buyers tax while Treasurer. Picture: NCA NewsWire

The Treasurer said he was happy to look at the Ontario model to see if it could work here.

“We’re happy to have a look at overseas jurisdictions. That doesn’t mean I’m going to sign up to their model, but we need to learn from their example,” he said.

The comments come after Fairfield Mayor Frank Carbone used the Telegraph’s Future Western Sydney event to call on an outright ban on foreigners buying homes.

If that doesn’t happen, Mr Carbone said, taxes should be increased to make foreign purchases unviable.

“If the state government can’t force the Prime Minister to listen (on a foreign buyer ban), the Premier should be taxing foreign buyers so much that it would no longer be viable to take a roof from over Australians’ heads,” he said.

Fairfield Mayor Frank Carbone, who told The Daily Telegraph’s Future Western Sydney event that foreign buyers should be banned from purchasing Australian homes, said a tax hike was a good stopgap measure. Picture: Richard Dobson

Legislation passed by the Albanese government last month has also increased federal government fees on foreign investors buying Australian property.

That legislation also closed a loophole which led to some $57 million being repaid to buyers from certain countries due to an inconsistency between state and federal laws.

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