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Foreign property investors purchasing established homes

From 1 April 2025 to 31 March 2027, foreign investors (including temporary residents and foreign-owned companies) will be prohibited from acquiring established dwellings unless they qualify for specific exemptions. While exemptions exist, they are limited.

The government hopes that by implementing these restrictions and tax adjustments, it will deter speculative practices that drive up property prices and limit the availability of homes for those who need them.

Foreign property investors purchasing vacant land

In addition, foreign investors who buy vacant land will need to meet certain development requirements, ensuring the land is put to productive use within a reasonable timeframe.

By requiring development on vacant land within a reasonable timeframe, the government intends to prevent land from being held idle and to encourage the creation of new housing, infrastructure, or commercial spaces that can boost local economies.

Additional land tax for property in trusts

We continue to see clients with family trust deeds that do not exclude foreign beneficiaries and are owning property within these trusts.

The surcharge land tax rate increased to 5% in 2025.  

For a family trust that excludes foreign beneficiaries with unimproved land value of $1,200,000 the land tax will be $19,300 per annum.  In contrast, for a trust without the exclusion clause, the tax will be $62,100 for 2025.

For a resident individual with no other interest in properties other than a main residence,  the land tax on unimproved land value $1,200,000 is $2,100.

Compliance and penalties

To ensure compliance, the Australian Taxation Office’s (ATO) foreign investment compliance team will be given additional funds to enforce the ban and enhance screening of foreign investment proposals relating to residential property. Investors who do not comply will face tough enforcement action.

Foreign investors that have already acquired or are proposing to acquire vacant residential or non‑residential land will be subject to heightened scrutiny by the ATO and Treasury to ensure they comply with development conditions.

For individuals and families holding property in trusts, it’s important to review trust deeds and ensure compliance with the new regulations to avoid unexpected financial penalties. The increased surcharge land tax rate serves as a significant incentive for trustees to exclude foreign beneficiaries from family trusts.