Chinese property buyers facing friendlier tax regimes in 2018-19

Chinese property buyers facing friendlier tax regimes in 2018-19

Fri, 29/06/2018 - 16:05
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Top Australian destinations for Chinese buyers are Melbourne, Sydney, Brisbane, Adelaide and the Gold Coast. Photo: Maximillian Conacher

Chinese property investors eyeing Australian markets are unlikely to face any new foreign buyer taxes in 2018-19, following imposts being put in place or increased in top buying destinations over the past three years.

A new report released by property buying portal Juwai.com showed that only New Zealand is likely to impose taxes on foreign buyers of real estate in 2018-19, among the top destinations for Chinese investment.

Over the past 24 months, foreign buyer restrictions have been introduced or increased in six of Australia’s states and territories, as well as in Canada’s two largest provinces.

“The outlook for the year ahead is far better than for the years recently past,” the Juwai report said.

The report found that the top market for Chinese buyers, the United States, would likely remain so in 2018-19, being the only destination in the top 6 countries for Chinese investment to not have any restrictions or taxes.

In Canada, provincial taxes as high as 20 per cent of the property’s value apply, while in Australia, foreign buyers face Foreign Investment Review Board fees and vacancy taxes, as well as being shut from purchasing existing homes.

In addition, only Tasmania and the Northern Territory do not have a state-based tax on offshore property purchases. In other states the surcharges range from a 0.75 per cent land tax surcharge in the ACT, to an 8 per cent impost in New South Wales.

WA, Queensland, Victoria and South Australia all have a 7 per cent surcharge in place on foreign property buyers.

Foreign buyers are required to pay capital gains on any properties sold prior to five years from purchase in New Zealand, while the Kiwi government is also considering banning offshore buyers from purchasing existing dwellings.

Capital gains taxes also apply to foreign property purchases in the United Kingdom.

In Thailand, foreign buyers are barred from owning land, however, offshore purchasers can enter a 30-year lease or purchase the property through a Thai-registered company, which must be at least 51 per cent owned by a Thai citizen.

Juwai.com chief executive Carrie Law said Chinese real estate investment appeared to be heading back to growth, after retreating from a peak of $US101.1 billion in 2016.

“The Chinese government seems comfortable with what it calls rational growth in international investment,” Ms Law said.

“Beijing has already telegraphed that it may experiment with further loosening capital controls.

“China has already resumed two outbound schemes for investment in overseas securities, which had been suspended to reduce capital outflows.

“These have no direct impact on foreign property buyers, but do reveal a change of direction from tightening to loosening.”