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Foreign Buyer Surcharges on Sydney Property (2026 Guide)

Foreign buyer property investment and costs with flags of USA, EU, Australia, and UK.

Understanding Foreign Buyer Duties and Restrictions in Sydney

Purchasing residential property in Sydney as a foreign buyer involves more than finding the right property and negotiating a contract. Foreign purchasers must also consider federal investment restrictions, NSW surcharge purchaser duty and the ongoing foreign-owned land tax surcharge.

Foreign buyers must consider both NSW surcharges and the federal rules governing the properties they can purchase. Read our separate explanation of foreign buyer restrictions and FIRB approvals.

These costs can be substantial. Foreign-person status is not always determined by citizenship alone, and different rules can apply to permanent residents, temporary visa holders, companies and trusts.

As of July 2026, foreign buyers must also consider the temporary federal restrictions on purchasing established residential dwellings. Before entering into a contract, it is important to confirm whether the proposed purchase is permitted and calculate the duties and taxes that may apply.

What Are the Current Foreign Buyer Surcharges in NSW?

Two primary NSW surcharges may affect a foreign person purchasing or owning residential property in Sydney:

  • Surcharge on purchaser duty, payable when residential property is acquired
  • Surcharge land tax, assessed annually while residential land is owned

These are separate charges. A foreign purchaser may need to pay both, as well as ordinary transfer duty and any standard land tax liability.

Surcharge Purchaser Duty Remains at 9%

Foreign persons purchasing residential-related property in NSW generally pay surcharge purchaser duty in addition to ordinary transfer duty.

The surcharge purchaser duty rate increased from 8% to 9% for contracts entered on or after 1 January 2025. As of July 2026, the rate remains 9%.

Surcharge purchaser duty is separate from ordinary transfer duty. Buyers can learn more about stamp duty in NSW, including when it is assessed and paid.

The surcharge is calculated on the property’s dutiable value, which is generally the higher of:

  • The purchase price; or
  • The property’s market value.

For example, if a foreign purchaser acquires a Sydney residential property with a dutiable value of $1.5 million, the surcharge purchaser duty alone may be $135,000. This is payable in addition to the ordinary NSW transfer duty applying to the transaction.

The surcharge can significantly affect the total amount required to complete a purchase. Buyers should therefore establish their foreign-person status and obtain an accurate duty estimate before exchanging contracts.

Revenue NSW generally requires duty to be paid within three months of the liability date, which is commonly the contract exchange date. Foreign persons are not entitled to the extended duty-payment deferral that may otherwise apply to qualifying off-the-plan purchases.

Further information is available from Revenue NSW.

 

Foreign-Owner Surcharge Land Tax Remains at 5%

Foreign persons who own residential land in NSW may also be required to pay surcharge land tax.

The surcharge land tax rate increased from 4% to 5% from the 2025 land tax year. The 5% rate continues to apply in 2026.

Unlike ordinary land tax, foreign-owner surcharge land tax:

  • Does not have a tax-free threshold
  • Is calculated on the unimproved land value rather than the property’s purchase price
  • May apply even where the property is exempt from ordinary land tax
  • Is assessed according to the foreign owner’s proportionate interest in the land

The surcharge is based on residential land owned at midnight on 31 December each year.

For example, if a foreign person owns residential land with an unimproved land value of $700,000, the annual surcharge land tax may be $35,000. This calculation does not include any ordinary land tax that may also be payable.

Where a property is jointly owned by a foreign person and an Australian citizen, the foreign owner is generally assessed on their share of the land. If the foreign person owns 50%, the surcharge is ordinarily calculated on 50% of the relevant land value.

Revenue NSW confirms that the 5% surcharge applies without a tax-free threshold.

Can Foreign Investors Buy Established Homes in Sydney in 2026?

Foreign persons are currently subject to a temporary federal restriction on purchasing established residential dwellings in Australia.

From 1 April 2025 until 30 June 2029(extended from 31 March 2027in the May 2027 Federal Budget), foreign persons are generally prohibited from purchasing established homes, including houses and apartments in Sydney. Limited exceptions may apply, but foreign buyers should not assume that an established dwelling is available to them merely because it has been advertised for sale.

The restriction does not mean that every type of residential property purchase by a foreign person is prohibited. Subject to Australia’s foreign investment framework and any required approval, foreign buyers may still be able to purchase:

  • New dwellings
  • Off-the-plan properties that have not previously been occupied
  • Vacant residential land intended for development
  • Certain properties acquired for redevelopment
  • Established dwellings where a specific exception applies

The federal restrictions and the NSW surcharges operate separately. Receiving foreign investment approval does not automatically provide an exemption from NSW surcharge purchaser duty or surcharge land tax.

Foreign buyers should confirm that a proposed acquisition is permitted before signing a contract or paying a deposit.

Are Permanent Residents Considered Foreign Buyers?

Permanent residency does not automatically prevent a purchaser from being treated as a foreign person under the NSW surcharge rules.

A permanent resident will generally be considered ordinarily resident in Australia, and therefore not liable for surcharge purchaser duty, where they:

  • Hold a permanent visa; and
  • Have been physically present in Australia for at least 200 days during the 12 months before the liability date.

The 200 days do not need to be consecutive. Entry and departure days can count towards the total.

If a permanent resident does not satisfy this retrospective test, they may still qualify for an exemption when purchasing a home as their principal place of residence. This generally requires the purchaser to live in the property continuously for at least 200 days within 12 months after the contract date.

This exemption is conditional. The property must be purchased by the individual rather than through a trust, and the occupation requirements must be met.

The residence rules should be reviewed carefully before exchange because failing to satisfy a conditional exemption can result in the surcharge becoming payable.

How Are Temporary Visa Holders Treated?

Most temporary visa and bridging visa holders are treated as foreign persons for NSW surcharge purchaser duty purposes.

This means they may be required to pay the 9% surcharge when purchasing residential property, even if they live and work in Australia.

Specific treatment may apply to certain visa holders, including some partner provisional and retirement visa holders who satisfy the relevant residence requirements. However, eligibility depends on the visa category, the buyer’s circumstances and how the property will be used.

Temporary residents must also comply with the federal foreign investment rules. The restrictions on purchasing established dwellings may significantly limit the types of residential property they can acquire during the temporary prohibition period.

Foreign Companies and Trusts Require Careful Review

Foreign-person status becomes more complex when a residential property is purchased through a company or trust.

Companies

A corporation may be treated as a foreign corporation where a foreign person or multiple foreign persons hold a substantial interest. This can result in surcharge purchaser duty applying even where the company is incorporated or operates in Australia.

The company’s ownership and control should be reviewed before it enters into a residential property transaction.

Discretionary trusts

A discretionary trust may be considered foreign if a foreign person is a potential beneficiary. The trust may be liable even if no distribution has ever been made to that beneficiary.

The terms of the trust deed are important. Broad beneficiary clauses can unintentionally expose a trust to surcharge purchaser duty and surcharge land tax.

Before a trustee purchases residential property, the deed and the trust’s foreign-person status should be reviewed. Amendments made after the transaction may not remove an existing duty liability.

Did the 2026–27 NSW Budget Change the General Surcharge Rates?

The NSW Budget delivered on 12 May 2026 did not introduce another general increase to the foreign purchaser or foreign-owner surcharge rates.

As of July 2026:

  • Surcharge purchaser duty remains 9%
  • Surcharge land tax remains 5%

The 2026–27 Budget measures primarily affect particular build-to-rent developments and retirement village acquisitions or transfers. These targeted measures do not change the general rates applying to ordinary foreign purchases of residential property in Sydney.

Revenue NSW published an updated surcharge purchaser duty guide following the Budget.

What Foreign Buyers Should Check Before Signing a Contract

Anyone buying property in Sydney should calculate the complete cost of the transaction before exchanging contracts, including ordinary duty, foreign-buyer surcharges and legal expenses. Before purchasing residential property in Sydney, a foreign buyer should confirm:

  1. Whether they are legally permitted to purchase the particular property
  2. Whether foreign investment approval is required
  3. Whether the property is new, established, vacant or intended for redevelopment
  4. Whether surcharge purchaser duty will apply
  5. The estimated ordinary transfer duty and surcharge duty
  6. Whether annual surcharge land tax will apply
  7. Whether a residency or principal-place-of-residence exemption is available
  8. Whether a company or trust will be treated as a foreign person
  9. What evidence is needed to support an exemption
  10. Whether the contract contains conditions relevant to foreign investment approval

These matters should be considered before exchange, not left until settlement. Once a binding contract has been entered into, the purchaser may have limited options if an unexpected approval issue or surcharge liability arises.

A professional contract review before signing can confirm key deadlines, identify whether the contract includes a foreign investment approval condition, and explain the buyer’s settlement obligations.

Frequently Asked Questions

Foreign persons generally pay surcharge purchaser duty equal to 9% of the residential property’s dutiable value. This is payable in addition to ordinary NSW transfer duty.

A foreign person who owns a Sydney apartment may be liable for surcharge land tax at 5% of their share of the apartment’s unimproved land value. There is no tax-free threshold for the foreign-owner surcharge.

Foreign persons are generally prohibited from purchasing established residential dwellings between 1 April 2025 and 30 June 2029(extended from 31 March 2027 in the May Federal Budget.). Limited exceptions apply, so the proposed purchase must be assessed individually.

Foreign buyers may be able to purchase a new or off-the-plan dwelling, subject to the federal foreign investment rules, any required approval and the conditions applying to the development.

Not necessarily. A permanent resident may avoid the surcharge if they satisfy the relevant 200-day residence test or qualify for a principal-place-of-residence exemption. Permanent residency alone does not always provide an automatic exemption.

Yes. A trust can be treated as foreign based on its structure, beneficiaries and trust deed. Discretionary trusts require particular care because a potential foreign beneficiary may affect the trust’s status.

Foreign buyer rules involve both federal investment restrictions and NSW taxation laws. A buyer may be permitted to acquire a property but still face substantial surcharge duty and annual land tax. Alternatively, the proposed acquisition itself may be restricted under the temporary federal rules.
Before exchanging contracts, obtain advice about the property, your residency status, any required approvals and the full cost of the transaction.
Eastside Legal provides property conveyancing services in Sydney for local and foreign buyers, including contract review, settlement preparation and guidance on the NSW conveyancing process.
Eastside Legal can review the contract and explain the conveyancing requirements that apply to your proposed Sydney property purchase. Contact our property conveyancing lawyers before signing to ensure you understand your legal obligations, expected costs and available options.
This article provides general information only and does not constitute legal, taxation or foreign investment advice. Requirements can vary according to the purchaser, ownership structure and property involved.

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