Buying property with a citizen or resident partner: what changes for the foreign buyer

The federal rule

Regulation 38(3) of the Foreign Acquisitions and Takeovers Regulation 2015 has two parts, and both must be met. The buyer must be the spouse or de facto partner (within the meaning of the Acts Interpretation Act 1901) of a person who, at the time of acquisition, is an Australian citizen, a permanent visa holder or a Special Category visa holder, or who would be entitled to a Special Category visa on arrival. And the interest must be held by the buyer and that partner as joint tenants.

The Regulation names joint tenants only and does not mention tenants in common. It tests the partner's status at the time of acquisition and says nothing about where the partner lives. The couples and joint buyers guide covers the approval and fee side in more detail.

The ban on established dwellings runs from 1 April 2025 to 30 June 2029 for foreign persons. The exemption works by taking the purchase outside the approval requirement, so whether the ban affects a particular established home is worth confirming with the ATO or a lawyer before signing.

How the way you hold title changes things

Joint tenants hold the whole property together, while tenants in common each hold a stated share. Treasury's vacancy fee guidance treats the two differently: for joint tenants only one return is lodged and one fee is payable if liable, while each tenant in common lodges a return.

Whether a funding arrangement gives the foreign partner a legal or equitable interest in the land is a legal question.

What the states charge on the foreign partner's share

New South Wales, Queensland and Victoria charge the surcharge on the foreign partner's portion of the dutiable value, not the whole price. Revenue NSW says surcharge purchaser duty is charged in proportion to the share acquired by foreign persons. The Queensland Revenue Office says that with three equal transferees where only one is a foreign acquirer, AFAD applies to that person's one-third interest. The State Revenue Office Victoria says that when a foreign purchaser buys with a non-foreign purchaser, additional duty applies only to the interest the foreign purchaser acquires.

Worked example. A couple buys a house for $1,000,000. One partner is an Australian citizen and the other is a foreign person, and they hold equal shares. The foreign share is $500,000.

These are on top of ordinary transfer duty on the full price, and assume the dutiable value equals the price and no exemption applies. See how foreign buyer stamp duty is calculated.

Victoria's rules and exemptions

The State Revenue Office Victoria publishes its own exemptions from foreign purchaser additional duty, and each has specific conditions. One covers a foreign purchaser buying a principal place of residence with a spouse or partner who is not a foreign purchaser: the office says an exemption may apply if the foreign purchaser lives in the property as their principal place of residence for 12 months, starting within 12 months of settlement. Read its exemptions page and the Victorian duty guide before relying on one.

Land tax after settlement

Revenue NSW charges surcharge land tax in proportion to each owner's share, and says there are no joint assessments for it. In its example a property with a land value of $2,100,000 is owned equally by a foreign person and an Australian citizen. The foreign owner pays 5% of her $1,050,000 share, which is $52,500, and the citizen is not liable for the surcharge.

Victoria has its own absentee owner surcharge and joint owner assessment rules, set out on the State Revenue Office's pages. In Queensland, the absentee surcharge is 3% of taxable value above $350,000, so it depends on the owner's total taxable land.

For the vacancy fee, the joint tenant and tenants in common rules described earlier apply.

If the relationship ends

A transfer of a home between former partners after a separation has its own federal and state treatment. The Regulation exempts an acquisition by devolution by operation of law (section 29), but whether a particular transfer qualifies depends on how it arises. A family lawyer can advise on how the federal and state rules apply to a particular settlement.

Frequently asked questions

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