Australian property remains a core holding for many Asian families. Ownership by foreign persons is regulated and taxed differently at both federal and state level, and the rules reach not only individuals but also companies and trusts with foreign owners or beneficiaries. The following is an overview of the Victorian and federal position as at late 2026.
Buying: FIRB and stamp duty
- Foreign investment approval. Foreign persons generally need approval from the Foreign Investment Review Board before buying residential land in Australia. From 1 April 2025 to 31 March 2027, foreign persons are generally prohibited from buying established dwellings, subject to limited exceptions. New dwellings and vacant land for development remain available with approval.
- Foreign purchaser additional duty. In Victoria, a foreign purchaser of residential land generally pays an 8% additional duty on top of ordinary transfer duty.
- Trusts and companies. A company or trust can be a “foreign” purchaser if foreign persons hold a sufficient interest. Discretionary trusts are a particular risk because a single foreign potential beneficiary can affect the trust’s status for state taxes unless the deed is drafted to exclude foreign persons.
Holding: land tax
Victoria imposes an absentee owner surcharge, currently 4% of the land’s taxable value each year, on top of ordinary land tax, on land owned by absentee individuals, foreign companies and absentee trusts. A discretionary trust with even one absentee beneficiary can be treated as an absentee trust unless its deed appropriately excludes such beneficiaries. Federal vacancy fees can also apply to foreign owners of residential property that is not occupied or genuinely available for rent.
Selling: capital gains and withholding
- Foreign residents pay CGT on Australian real property. Foreign residents are generally not entitled to the 50% CGT discount for periods after 8 May 2012 and generally cannot claim the main residence exemption, subject to limited exceptions.
- Withholding on every sale. For contracts from 1 January 2025, a purchaser must withhold 15% of the price and pay it to the ATO, regardless of the property’s value, unless the seller provides an ATO clearance certificate. This applies to Australian residents as well, who must obtain a clearance certificate to avoid withholding.
- Rental income. Foreign residents are taxed on Australian rental income without the tax-free threshold.
Estates, inheritances and family structures
When an owner dies, property may pass to beneficiaries overseas, or into an estate or testamentary trust with foreign beneficiaries. That can change the land tax and duty position, and Australian real property remains subject to Australian CGT when later sold by a foreign resident. Wills and trust deeds for families with members overseas should address these rules from the outset. See Singapore families with Australian property and no inheritance tax in Australia?.
How we assist
We advise families on structuring and documenting Australian property ownership, review trust deeds for foreign-person exclusion clauses, act on purchases and sales, and administer estates holding Australian property for beneficiaries overseas. This article is general information only; duty, land tax and income tax outcomes depend on individual circumstances and should be confirmed with a qualified adviser. Justin Chua is a Nationally Accredited Mediator and an Affiliate member of STEP, the worldwide professional body for trust and estate practitioners.
Frequently asked questions
Can foreign persons buy established homes in Australia?
From 1 April 2025 to 31 March 2027, foreign persons are generally prohibited from buying established dwellings, subject to limited exceptions. New dwellings and land for development generally remain available with FIRB approval.
What extra duty do foreign purchasers pay in Victoria?
Foreign purchasers of residential land in Victoria generally pay an additional duty of 8% of the price or market value, on top of ordinary transfer duty.
Can a family trust be treated as a foreign owner?
Yes. A discretionary trust with foreign potential beneficiaries may be treated as a foreign or absentee trust for Victorian duty and land tax unless its deed effectively excludes foreign persons.
Do Australian residents need a clearance certificate when selling property?
Yes. Since 1 January 2025, a purchaser must withhold 15% of the price on every property sale unless the seller provides an ATO clearance certificate, whatever the property’s value.
Chua Tan Associates advises families, executors, trustees and their professional advisers on estate planning, estate administration and estate disputes, in Australia and across borders. To arrange a confidential consultation, please contact our Melbourne office on +61 3 9602 3988 or submit an enquiry. Advice is available in English, Mandarin and Cantonese.
Justin Chua (蔡智勋), lawyer and mediator, Chua Tan Associates, Melbourne. General information only, not legal or tax advice. Victorian law unless stated otherwise.
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