In short
Foreign purchasers acquiring residential property in New South Wales face a strict three-tier regulatory framework: Commonwealth Foreign Investment Review Board (FIRB) approval, NSW Surcharge Purchaser Duty of 8% on top of standard transfer duty, and an annual 5% Surcharge Land Tax.
You must obtain FIRB approval before entering an unconditional binding contract or ensure your contract contains an express FIRB condition. Failure to obtain statutory approval or file required purchaser declarations exposes you to substantial civil penalties, criminal liability, and forced disposal orders.
Who is treated as a foreign person under Australian property laws?
Under the Foreign Acquisitions and Takeovers Act 1975 (Cth) and the NSW Duties Act 1997, you are classified as a foreign person unless you fall into a specific statutory exemption.
You are not a foreign person if you are:
- an Australian citizen;
- a New Zealand citizen who holds a Special Category Visa (subclass 444) and was in Australia for at least 200 days in the 12 months immediately preceding the contract date; or
- a holder of an Australian permanent residency visa who was physically present in Australia for at least 200 days in the preceding 12 months.
If you hold a temporary resident visa (such as a subclass 482 skilled worker, subclass 500 student, or bridging visa awaiting permanent residency) or reside entirely overseas, you are treated as a foreign person. Corporations and trusts where foreign individuals hold a substantial interest (20% or more individually, or 40% in aggregate) are also classified as foreign entities.
What types of NSW residential property can foreign buyers acquire?
Commonwealth law channels foreign investment into increasing Australia's housing supply rather than competing for established homes. The rules strictly depend on the property classification:
- New dwellings: Foreign persons may buy brand-new residential dwellings (including off-the-plan apartments and newly constructed townhouses) with unconditional FIRB approval. There is no limit on the number of new dwellings a foreign investor can purchase.
- Vacant land: Foreign buyers may purchase vacant land for residential development, provided construction of a dwelling is completed within four years of FIRB approval.
- Established dwellings: Foreign non-residents are completely prohibited from purchasing established (second-hand) residential dwellings as investment properties. A temporary resident may apply to buy one established dwelling solely to live in as their principal place of residence; they must sell that property within three months of ceasing to live in it or when their visa expires.
When and how must you obtain FIRB approval?
You must obtain FIRB approval before entering an unconditional contract to purchase residential real estate. If you sign a contract without approval, you must include a specific, solicitor-drafted special condition making the contract strictly subject to FIRB approval within an agreed timeframe.
FIRB applications are submitted online through the Australian Taxation Office (ATO) foreign investment portal. You must pay a non-refundable statutory application fee before the ATO assesses your application. Statutory review periods typically run for 30 days once the fee is received, though extensions can occur.
Entering an unconditional purchase contract without valid FIRB approval constitutes a serious offence under Commonwealth legislation, carrying severe civil monetary penalties and potential court-ordered divestment of the property.
How does NSW Surcharge Purchaser Duty apply to your purchase?
In New South Wales, foreign buyers must pay Surcharge Purchaser Duty under Chapter 2A of the Duties Act 1997 (NSW). This surcharge is currently set at 8% of the dutiable property value and applies in addition to the standard NSW transfer duty.
For example, if you purchase a Sydney residential property for $1,500,000 as a foreign purchaser:
- Standard NSW transfer duty is approximately $65,500;
- Surcharge Purchaser Duty (8%) is $120,000;
- Total NSW stamp duty payable is approximately $185,500.
All buyers must complete and sign the Revenue NSW Purchaser Declaration Form (Form ODA 076) before settlement. Duty must be paid within three months of contract exchange or at completion, whichever occurs first.
What annual holding costs apply under NSW Surcharge Land Tax?
In addition to upfront acquisition duty, foreign owners of NSW residential land are liable for annual Surcharge Land Tax under section 5A of the Land Tax Act 1956 (NSW). The surcharge land tax rate is 5% of the unimproved taxable land value.
Key rules for foreign property owners include:
- The 5% surcharge applies with no tax-free threshold;
- The tax is assessed on land owned as at midnight on 31 December each year;
- The principal place of residence exemption does not exempt foreign persons from the surcharge, unless a specific permanent visa concession applies.
Foreign owners must register with Revenue NSW and lodge their land tax declaration online every year to avoid statutory penalty interest.
What are the post-settlement vacancy fee rules?
Foreign owners of Australian residential property must lodge an annual foreign vacancy fee return with the ATO under the Foreign Acquisitions and Takeovers Fees Imposition Act 2015.
If your residential property is not occupied by you or rented out to a genuine tenant on commercial terms for at least 183 days (six months) during a 12-month vacancy year, you must pay an annual vacancy fee. The vacancy fee is generally equal to the original FIRB application fee paid at purchase.
You must lodge your vacancy return through the ATO online portal within 30 days after the end of each 12-month vacancy year, regardless of whether the home was occupied or vacant.
What should you check before signing a property contract in NSW?
Before you commit to a purchase or transfer a deposit, you must complete the following steps:
- Verify your exact residency status against the 200-day presence rule and visa conditions;
- Calculate total transaction costs, including the 8% surcharge duty, FIRB application fee, and ongoing 5% land tax;
- Have a property solicitor review the contract of sale and insert a protective FIRB conditional clause before exchange;
- Ensure your lender is licensed to lend to foreign purchasers and has issued formal finance approval;
- Prepare the Revenue NSW Purchaser Declaration Form and verified identification documents for digital PEXA settlement.
Our team provides end-to-end guidance across our residential property conveyancing, off-the-plan purchases, and commercial property services.
Are you planning a property purchase in New South Wales?
Biz Lawyers & Advisory assists foreign purchasers, expatriates, and international investors navigate FIRB regulations, duty declarations, and seamless settlement processes.
Contact Biz Lawyers & Advisory or call 1800 893 836 to speak with our Sydney property solicitors.
This article provides general information only. It is not legal, taxation, or financial advice. Foreign investment rules, duty surcharges, and land tax obligations depend on your specific citizenship, visa status, entity structure, and transaction date.
Primary sources
Law and guidance checked 27 August 2026.
