So, you’re thinking about buying property in Sydney? Congratulations! Get ready for stunning views, vibrant city life, and…taxes. Yep, you can’t escape them, but don’t worry – we’re here to make sure you navigate this with a smile on your face. Here are tips to help you master property taxes like a pro – and maybe even have a laugh or two along the way. 

• Stamp Duty

Stamp duty is a significant upfront cost when purchasing property in Sydney. It is calculated based on the property’s value, with rates varying depending on whether the buyer is a first-time homeowner, an investor, or a foreign buyer. For foreign investors, there is an additional surcharge of on top of the standard stamp duty.

• Capital Gains Tax (CGT)

Capital Gains Tax applies ONLY when you sell a property for a profit. The gain is added to your taxable income and taxed at your marginal rate for that year. For foreign investors, it’s important to note that CGT discounts available to Australian residents do not apply, potentially increasing the tax burden when selling a property.

• Foreign Investment Review Board (FIRB) Fees

Foreign buyers must obtain approval from the FIRB before purchasing property in Australia. This approval comes with application fees, ranging from $6,350 for properties under $1 million to over $100,000 for properties above $40 million. These fees are necessary for international investors looking to enter the Sydney market.

• Land Tax

Land tax is an annual tax levied on the unimproved value of land owned in Sydney. While principal places of residence are generally exempt, investment properties are subject to land tax. Foreign owners are subject to a minor surcharge of 2% on top of the general land tax rates.

• Withholding Tax for Foreign Residents

When selling a property valued over $750,000, foreign residents must withhold 12.5% of the purchase price to cover any tax liabilities. This withholding tax ensures that the Australian Taxation Office (ATO) can collect CGT liabilities from non-resident sellers.

Navigating property taxes in Sydney doesn’t have to feel like running a marathon in high heels. With these tips in hand, you’ll be skipping through the process with a smile, so go ahead, make your move, and remember: property taxes are just part of the ride to owning your piece of paradise in Sydney. Please connect to learn more.