Foreign resident withholding tax on real estate transactions

Foreign resident withholding tax on real estate

New foreign resident withholding tax on real estate transactions have come into force and purchasers may be required to withhold 10 percent tax on the sale of certain Australian real property interests under contracts entered into on or after 1 July 2016.

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Real estate under contruction

Who will be required to withhold?

The withholding tax will be payable by purchasers, be they resident or non-resident, acquiring relevant Australian assets from a non-resident vendor unless an exemption applies.

Relevant assets

The relevant assets are:

  • taxable Australian real property (“TARP”)
  • an indirect Australian real property interest - i.e. interests in entities with a market value predominantly comprised of Australian real property assets
  • an option or right to acquire such property or interest.

The amount of the withholding tax is 10 percent of the purchase price for the asset and is payable on or before the day the purchaser becomes the owner of the property, i.e. generally on or before settlement rather than contract date.


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