In short: If you are a foreign purchaser buying residential property in Victoria, you pay foreign purchaser additional duty of 8% of the dutiable value on top of the normal land transfer duty. Foreign purchasers include temporary visa holders, foreign companies and foreign trusts. An exemption applies where you buy your home jointly with a spouse or domestic partner who is an Australian citizen, permanent resident or New Zealand citizen.
Many of the buyers GNT Finance works with in Melbourne's north arrived on student or skilled visas. The single biggest surprise for them is that the duty bill on a modest house can more than double until permanent residency is granted. This page explains the rule, the exemptions, and how to plan around it.
What the law says
Foreign purchaser additional duty (FPAD) is imposed by the Duties Act 2000 (Vic). It applies to a foreign purchaser who acquires an interest in residential property in Victoria, and the rate is currently 8% of the dutiable value, charged in addition to the general land transfer duty calculated at the normal rates.
A foreign purchaser is:
- a foreign natural person: anyone who is not an Australian citizen, an Australian permanent resident, or a New Zealand citizen holding a special category visa. Holders of temporary visas such as student, graduate, skilled temporary and bridging visas are foreign natural persons;
- a foreign corporation: a company incorporated outside Australia, or an Australian company in which a foreign person or persons hold a controlling interest; or
- a foreign trust: a trust in which a foreign person holds a substantial interest.
Residential property means land capable of being used for residential purposes, including vacant land where a home will be built, and land that will be converted to residential use.
Exemptions and relief
- Spouse or domestic partner exemption. A foreign purchaser who buys a home jointly with their spouse or domestic partner, where the partner is an Australian citizen, permanent resident or eligible New Zealand citizen, and the home will be their principal place of residence, is exempt from FPAD on their share. The residence requirement mirrors the PPR duty rules.
- Treasurer's discretion. The Treasurer may exempt certain foreign corporations and trusts that contribute to housing supply, mainly developers.
- Refunds. If you pay FPAD and later show you were not a foreign purchaser at the contract date, or an exemption applied, the SRO can refund the additional duty on application.
Related surcharges
- Absentee owner surcharge. Under the Land Tax Act 2005 (Vic), an absentee owner pays a 4% surcharge on top of general land tax each year. An absentee owner is a foreign natural person who does not ordinarily reside in Australia, or a foreign corporation or trust. A temporary visa holder living in Victoria is generally not an absentee for land tax purposes. See land tax in Victoria explained.
- Vacant residential land tax applies state-wide to homes left empty. See vacant residential land tax.
- Federal FIRB rules. Foreign persons generally also need approval under the Foreign Acquisitions and Takeovers Act 1975 (Cth) before buying. See FIRB approval for property.
How FPAD is calculated, step by step
- Determine the dutiable value: the greater of the price and market value.
- Calculate general duty at the standard rates.
- Calculate FPAD at 8% of the dutiable value.
- Add the two. Both are payable at settlement through Duties Online.
- If only one co-purchaser is foreign, FPAD applies only to that purchaser's share, unless the spouse exemption applies.
Comparison at common price points
| Purchase price | General duty | FPAD (8%) | Total duty for a foreign purchaser |
|---|---|---|---|
| $500,000 | $25,070 | $40,000 | $65,070 |
| $580,000 | $29,870 | $46,400 | $76,270 |
| $650,000 | $34,070 | $52,000 | $86,070 |
| $720,000 | $38,270 | $57,600 | $95,870 |
General duty here is the standard rate with no concession. A foreign purchaser who will live in the home may still qualify for the PPR concession or the first home buyer concession on the general duty component if they meet those conditions, but FPAD is charged regardless.
Worked example
Suresh is on a temporary skilled visa and buys a $650,000 house in Craigieburn in his own name. General duty is $2,870 plus 6% of $520,000, or $34,070. FPAD is 8% of $650,000, or $52,000. Total duty: $86,070, which is over 13% of the price.
His partner Anita is an Australian permanent resident. If they instead buy jointly as their principal place of residence, Suresh's share is exempt from FPAD under the spouse exemption. Their duty falls to $34,070, and if neither has owned before, the first home buyer concession reduces it further.
If Suresh expects permanent residency within a year, a third option is to wait. Once he holds PR at the contract date, he is not a foreign purchaser, and the $52,000 disappears. A two-year wait at a rising market may or may not be worth it, but the comparison should be made deliberately.
What it means for your home loan
- A much bigger deposit. The 8% is not something a lender will finance beyond the approved loan. On a $650,000 purchase, a foreign purchaser needs an extra $52,000 in cash at settlement.
- Visa-holder lending policies. Lenders that lend to temporary residents usually cap the LVR, sometimes at 80% or lower, and want longer visa validity. Our page on home loans for visa holders explains who lends and on what terms.
- FIRB approval first. Lenders will not go unconditional without evidence of FIRB approval or exemption.
- The spouse exemption changes the whole structure. Buying jointly with a citizen or PR partner reduces duty and often opens up more lenders. It also means both partners are jointly liable for the loan; see buying property with a partner.
- Timing PR. If your permanent residency is imminent, a pre-approval now and a contract after the grant can save tens of thousands.
GNT Finance works with many South Asian and Nepali families in Melbourne's north where one partner holds PR and the other is still on a visa, and structures the purchase to use every available exemption. Our home-loan service is at no cost to you in most cases.
Common mistakes
- Assuming a bridging visa counts as PR. It does not. Foreign purchaser status is tested at the contract date.
- Buying in the visa holder's sole name when a PR spouse could have been on the title.
- Forgetting the surcharge on vacant land. Land in a house-and-land package is residential property and attracts FPAD.
- Missing the refund window. If PR was granted before the contract date but the duty was assessed as foreign, apply to the SRO.
- Ignoring the FIRB step and signing an unconditional contract you cannot legally complete.
Frequently asked questions
Do temporary residents pay extra stamp duty in Victoria?
Yes. A temporary visa holder is a foreign natural person under the Duties Act 2000 (Vic) and pays foreign purchaser additional duty of 8% of the property's dutiable value on top of general land transfer duty. The only common exception is buying your home jointly with a spouse or domestic partner who is an Australian citizen, permanent resident or eligible New Zealand citizen.
How much is foreign buyer stamp duty in Victoria?
The additional duty is 8% of the dutiable value. On a $650,000 home that is $52,000, added to general duty of $34,070 for a total of $86,070. On a $500,000 home it is $40,000 on top of $25,070 general duty. The additional duty is paid at settlement together with the general duty.
Can I avoid foreign purchaser duty by buying with my Australian partner?
If your partner is an Australian citizen, permanent resident or eligible New Zealand citizen, you buy jointly, and the property will be your principal place of residence, your share is exempt from the additional duty. The exemption depends on you being spouses or domestic partners and living in the home. Buying with a friend or sibling who is a citizen does not qualify.
Do I get the foreign purchaser duty back when I become a permanent resident?
Not automatically, and generally not if you were a foreign purchaser at the contract date. The test is your status when the contract is signed. If permanent residency was granted before you signed but the duty was calculated as though you were foreign, you can apply to the SRO for a refund. If PR is close, consider waiting to sign.
Does foreign purchaser duty apply to land or a house-and-land package?
Yes. Vacant land on which a home will be built is residential property for FPAD purposes, so the 8% applies to the land purchase. The build contract itself is not a transfer of land and does not attract duty. This makes house-and-land packages relatively cheaper for foreign purchasers than an established home of the same total value.
Talk to GNT Finance
If you or your partner are on a visa, the order in which you do things can save a five-figure sum in duty. GNT Finance can map out the timing, the ownership structure and the lenders that will approve you. Book a free consultation or call 0426 403 703.
This page is general information only and not legal, tax or financial advice. Laws change — confirm current rules with the State Revenue Office, the ATO or a licensed professional.
Written by Gorakh Timilsina
Founder, CEO & Senior Mortgage Consultant at GNT Finance. Gorakh started as a broker assistant, spent years as a senior credit officer assessing loan applications, and now helps Melbourne families get the right loan approved. English, Nepali and Hindi spoken.