Australia – Property Taxes

What taxes and fees apply when buying a property in Australia?

Stamp duty — referred to officially as transfer duty in most jurisdictions — is a tax imposed by state governments whenever property changes hands in Australia. It ranks among the most substantial upfront costs in any real estate transaction, commonly falling between 3% and 6% of the purchase price depending on the location and the buyer’s profile. This is broadly on a par with stamp duty in the United Kingdom or land transfer tax in Canada, though Australian rates diverge considerably from one state to the next.

Each Australian state applies its own calculation methodology. New South Wales uses a progressive scale running from 1.25% to 5.5%, with a further 7% premium rate on residential purchases exceeding $3,721,000 (2025–26). Victoria applies a distinctive structure in which properties priced between $960,001 and $2,000,000 attract a flat 5.5% rate on the full purchase price rather than only the marginal portion. Tasmania has the lowest overall stamp duty rates nationally, with a top marginal rate of just 4.5%.

Transfer duty is assessed against whichever is higher: the contract or purchase price, or the property’s dutiable market value. Duty must ordinarily be paid within three months of signing the contract, or at settlement if that occurs earlier. It is essential to confirm the precise rates and payment deadlines with the relevant state revenue office before exchanging contracts.

In addition to transfer duty, purchasers typically meet the following costs:

• Conveyancing and legal fees: A solicitor or licensed conveyancer oversees title searches and contract review. Fees generally fall in the range of approximately $1,000 to $3,000 or more, varying with complexity and location.
• Title registration fee: A government charge for updating land ownership records to reflect the new owner’s name. Transfer registration fees across different states typically add $200–$800 per transaction (as of 2025).
• Mortgage registration fee: A separate government levy to record your mortgage and the lender’s interest on the title, usually in the $100–$300 range.
• Building and pest inspection: Not compulsory, but widely recommended; usually costs $400–$800.
• Lender’s mortgage insurance (LMI): Required when borrowing in excess of 80% of the property’s value; this can add thousands of dollars to the overall cost of purchase.

Worked example: buying a $750,000 established home in NSW (non-first-home buyer, as of 2025)

Always use the official state revenue office calculator for a precise duty figure, and consult a licensed conveyancer for a full breakdown of anticipated costs. Rates and thresholds are subject to regular revision.

What taxes and fees apply when selling a property in Australia?

Unlike the situation in many other countries, transfer duty in Australia is the buyer’s obligation rather than the seller’s. As a result, a seller’s outgoings are concentrated on agent commissions, legal costs, and any applicable capital gains tax liability (addressed in the following section).

The principal costs typically borne by a seller include:

• Real estate agent commission: The largest single selling expense. Commissions are negotiable and differ by state and property value, but generally range from 1.5% to 3.5% of the sale price inclusive of GST.
• Conveyancing and legal fees: A solicitor or conveyancer prepares the contract of sale and coordinates settlement. Typical fees run from $800 to $2,500.
• Marketing and advertising costs: Often invoiced separately from the agent’s commission; these can range from a few hundred dollars to several thousand for premium promotional campaigns.
• Auction fees: Where a property is sold at auction, an auctioneer’s fee of $400–$1,000 is commonly charged.
• Mortgage discharge fee: If you hold a mortgage, your lender may charge a fee of $150–$500 to release their interest in the property title.

Sellers disposing of an investment property should also factor in their potential capital gains tax exposure, which can in some cases represent the single greatest cost of the transaction. Sellers who are uncertain about their Australian tax residency status should obtain an ATO Clearance Certificate prior to settlement. Without a valid certificate in place, buyers are legally obliged to withhold 15% of the sale price and pay it directly to the ATO — even where the seller is in fact an Australian resident.

Is capital gains tax payable on property sales in Australia?

Yes. Australia taxes capital gains arising from property disposals, although CGT is not a standalone tax — it forms part of your annual income tax return. If you realise a net capital gain, it is added to your other assessable income and taxed at your applicable marginal rate. Australia’s individual marginal income tax rates range from 0% to 45%, plus a 2% Medicare levy, as of 2025–26; refer to the ATO website for the current schedule.

The main residence exemption: Under this exemption, Australian tax residents generally incur no CGT liability on the sale of their primary home. A full exemption applies where the property was your main residence throughout the entire period of ownership and was never used to generate assessable income. Where only partial conditions are met — for instance, if you rented the property out for a period, or used part of it for income-producing purposes — a proportional exemption may apply instead.

The 50% CGT discount: Australian resident individuals who have held an asset for at least 12 months are entitled to a 50% reduction of their net capital gain, meaning only half the gain is included in assessable income. This makes longer-term property ownership considerably more tax-efficient than short-term buying and selling. Where a property has been used to provide affordable rental accommodation, the available discount can increase to as much as 60%.

Capital losses: A net capital loss cannot be offset against ordinary income in the same year. It can, however, be carried forward indefinitely to reduce capital gains realised in subsequent income years.

Timing of the CGT event: A capital gain is crystallised on the date the sale contract is entered into, not the date of settlement — an important distinction for end-of-financial-year planning.

Rules for non-residents and foreign persons: As a general principle, foreign residents are subject to CGT only in respect of assets that constitute taxable Australian property. Importantly, foreign residents are not entitled to the 50% CGT discount on Australian real estate. Individuals who spent any period as a foreign resident after 8 May 2012 may not be eligible for the full discount on capital gains arising from CGT events occurring after that date.

Foreign Resident Capital Gains Withholding (FRCGW): From 1 January 2025, significant changes to Australia’s Foreign Resident Capital Gains Withholding regime took effect, introducing a higher withholding rate and removing the previous property price threshold. When a non-resident disposes of Australian property, the purchaser must withhold 15% of the sale price and remit it to the ATO. Non-residents may apply for a reduced withholding rate or claim a credit against their final tax liability when lodging their Australian tax return.

Practical CGT example (Australian resident investor, as of 2025)

Consider an investor who acquires a property for $500,000 and sells it five years later for $600,000, having held it for more than 12 months. After accounting for allowable costs, the capital gain is $600,000 − $530,000 = $70,000. Applying the 50% CGT discount reduces the taxable gain to $35,000, which is then added to the investor’s other assessable income and taxed at their marginal rate.

Given that individual circumstances vary considerably, always confirm your CGT position with the ATO’s CGT guidance or a registered tax professional.

Are there annual property taxes in Australia?

Two recurring property-related charges exist in Australia: council rates and state land tax. Australia does not operate a broad annual property tax of the kind found in parts of Europe or the United States that applies universally to all owners regardless of use.

Council rates: All property owners are required to pay annual rates levied by their local council, which fund services such as waste collection, roads, parks, and community infrastructure. Individual councils set their own rates based on land value or capital improved value, and amounts differ substantially by location. As a broad guide, annual council rates on a typical residential property might range from around $1,000 to $3,000 or more per year. Contact your local council for specific figures applicable to your property.

Land tax: Land tax is an annual charge imposed by each state on the unimproved value of land — the value of the land itself, excluding any buildings or other improvements. Most states provide a tax-free threshold below which no land tax is payable, but once the combined taxable value of your land in a particular state exceeds that threshold, land tax applies. Each jurisdiction has its own rates, thresholds, and exemptions.

A property owner’s principal residence is generally exempt from land tax, as are certain primary production properties and land held by qualifying charitable organisations. Land tax does apply to investment properties, vacant land holdings, and much commercial property. Most states and territories also impose surcharges on absentee or foreign owners.

Key thresholds and rates by state (as of 2025–26):

Victoria’s $50,000 land tax threshold is the lowest of any Australian jurisdiction, meaning virtually every investment property in the state will incur land tax. Factoring in additional surcharges, Victoria is by some margin the most expensive state for investors in this regard. The Northern Territory stands alone as the only jurisdiction in Australia that levies no land tax at all, making it distinctive from an investment perspective.

Land tax assessments are made separately within each state based on your total taxable landholdings in that state — there is no cross-border aggregation. Holding investment properties across multiple states therefore results in separate assessments and separate thresholds in each jurisdiction. Verify current thresholds and rates with the relevant state revenue office, as these are updated on a regular basis.

In New South Wales, an additional surcharge land tax of 5% applies to foreign persons holding residential land, with no tax-free threshold applicable to this surcharge. Comparable foreign owner surcharges operate in Victoria, Queensland, and elsewhere — consult each state’s revenue authority for the current applicable rates.

How is rental income from property taxed in Australia?

Rental income derived from Australian property is assessable income and must be declared in your Australian tax return each year — this obligation applies whether you are a resident or a non-resident for tax purposes. The income is subject to tax at the relevant marginal rates.

For Australian tax residents, rental income is included in total assessable income and taxed on a progressive basis. Marginal rates range from 0% to 45%, plus a 2% Medicare levy, as of 2025–26; current rates are available at ato.gov.au.

For non-residents, rental income from Australian property remains taxable in Australia. Non-residents face different — and generally higher — tax rates from the very first dollar of income, with no tax-free threshold available. As of 2025–26, the non-resident marginal rate commences at 30% on taxable income up to $135,000; always confirm the current rates with the ATO.

Deductible expenses available to landlords include:

• Interest charged on investment property loans
• Property management fees
• Council rates and land tax
• Building insurance and landlord insurance premiums
• Repairs and routine maintenance
• Depreciation on the building and fittings (capital works deductions)
• Tenant advertising costs
• Accounting and legal expenses related to the rental activity

Negative gearing: Where allowable deductions on an investment property outstrip the rental income it earns, the resulting shortfall can generally be applied against other assessable income — such as salary — thereby reducing total tax payable. This arrangement, known as negative gearing, is a widely used feature of Australia’s tax system. Unlike many comparable countries, where rental losses may only be carried forward against future rental profits, Australia permits the offset against broader income. Given that negative gearing reform has been a recurring topic of political debate, it is always prudent to confirm the current rules with the ATO or a tax adviser.

Short-term rentals (Airbnb and similar platforms): Income received through short-term rental platforms is classified as rental income and is fully taxable. The ATO actively monitors activity on these platforms. Deductible expenses must be apportioned to reflect only the periods during which the property was rented or genuinely available for rent — private use periods are excluded. Some states and local authorities impose additional short-term rental regulations and registration requirements; check with the relevant local body. Renting your main residence on a short-term basis does not preserve the full main residence CGT exemption for the period of rental.

Landlords are required to maintain thorough records of all income and expenditure. Australian tax returns are lodged annually, with the standard financial year running from 1 July to 30 June. For further detail, refer to the ATO’s rental property guidance.

Does inheritance tax apply to property in Australia?

Australia abolished federal inheritance and estate duties in 1979, and no state or territory currently imposes them. There is therefore no inheritance tax, estate duty, or succession charge on property passing to beneficiaries upon a person’s death. This sets Australia apart from jurisdictions such as the United Kingdom — where inheritance tax applies above a threshold — and the United States, which maintains a federal estate tax, making the Australian position comparatively uncomplicated.

That said, there are meaningful CGT implications worth understanding when property is received as part of an estate:

• CGT is triggered not at the point of inheritance, but when the beneficiary subsequently sells or otherwise disposes of the inherited property.
• The cost base of an inherited property is generally reset to its market value at the date of the deceased’s death (or, in certain cases, the original acquisition price), which can substantially reduce the capital gain on a later sale.
• If the inherited property was the deceased’s main residence and the beneficiary sells it within two years of the date of death, a full main residence exemption may be available. A qualified tax adviser should be consulted for advice specific to your circumstances.

For non-resident beneficiaries: A non-resident who inherits Australian real estate remains subject to Australian CGT rules on any subsequent disposal. The 50% CGT discount for assets held for 12 months or more is generally unavailable to non-residents. Where a seller cannot demonstrate their Australian tax residency, or where a non-resident is selling, the 15% withholding obligation is likely to apply. Australian residents can avoid this by obtaining an ATO Clearance Certificate in advance of settlement.

Tax treaties: Australia has entered into double tax agreements (DTAs) with a number of countries, which may affect how inherited property is treated under the tax laws of the beneficiary’s home country. These agreements are designed to prevent the same income or gain being taxed twice. Professional advice from someone familiar with both Australian and home-country tax law is essential. It is worth noting that treaty-based exemptions from foreign surcharges for citizens of New Zealand, Finland, Germany, India, Japan, Switzerland, Norway, and South Africa were removed on 8 April 2024 following federal legislative changes — a reminder that treaty protections are not permanent, and expert guidance remains important.

Does gift tax apply to property transfers in Australia?

Australia imposes no gift tax. Property may be transferred as a gift to another person — whether a family member, a partner, or an unrelated third party — without attracting any federal gift duty. This distinguishes Australia from countries such as Germany, Spain, and the United States, where gifts exceeding certain thresholds are subject to taxation.

However, gifting property is not entirely without tax consequences:

• CGT exposure for the donor: A gift of property constitutes a disposal for CGT purposes. The ATO treats the transaction as having occurred at market value on the date of the gift, so if the property has appreciated in value since it was acquired, the person making the gift may face a CGT liability calculated on that market value — even though they received no sale proceeds. This mirrors the deemed disposal treatment applied in France and several other countries.
• Transfer duty for the recipient: A stamp duty exemption applies only to transfers of the family home between spouses or de facto partners. In other cases involving family members, the state revenue office will generally require a market valuation, and stamp duty is assessed on the basis of that value rather than the nominal gift amount or any listed contract price. Some jurisdictions provide specific concessions for intra-family transfers — always check with the applicable state revenue office.
• Centrelink and social security implications: For donors receiving Australian government benefits, gifting assets above prescribed thresholds may adversely affect their entitlements under Centrelink’s deprivation provisions. Seek independent financial advice before transferring significant assets by way of gift.

For precise and current guidance on the tax consequences of gifting property, consult the ATO, the relevant state or territory revenue office, or engage a registered tax adviser.

Are there any tax advantages or incentives for buying property in Australia?

Australia provides a variety of concessions and incentives aimed at first-home buyers, property investors, and purchasers of new or off-the-plan dwellings.

First Home Owner Grant (FHOG): A jointly funded federal and state grant available to eligible first-home buyers purchasing a new or substantially renovated dwelling. Grant amounts differ from state to state. Queensland currently offers a $30,000 First Home Owner Grant — the highest in Australia — available until June 2026. Grant levels and eligibility requirements vary and are revised periodically; always confirm the current position with your state or territory revenue office.

First home buyer stamp duty concessions: The majority of states offer either full or partial stamp duty exemptions for qualifying first-home buyers. In New South Wales, eligible first-home buyers may be fully exempt on purchases up to $800,000, with scaled concessions available up to $999,999 (as of 2025–26). Western Australia provides a full exemption up to $500,000, with partial relief extending to $700,000 for metro purchases or $750,000 for regional ones. South Australia grants a complete stamp duty exemption to first-home buyers of new homes with no upper value cap, though no concession applies to established dwellings.

NSW First Home Buyer Choice: New South Wales introduced a scheme that allows eligible buyers to choose between paying stamp duty upfront or opting for a smaller ongoing annual property tax. The annual property tax is calculated at 0.3% of the land value plus $400 per year. This option is particularly well suited to buyers who have limited funds available at settlement. Check current eligibility and scheme details at Revenue NSW.

Off-the-plan stamp duty concessions: Victoria has broadened an off-the-plan concession accessible to all buyers, including investors, until October 2026, delivering average savings of around $24,500. In New South Wales, the off-the-plan concession permits deferral — rather than reduction — of transfer duty for owner-occupiers purchasing a residential property prior to construction being completed.

Negative gearing and investment property deductions: As outlined in the rental income section, investors may deduct a broad range of costs against rental income. Where deductions exceed income, the shortfall can generally be applied against other assessable income. This represents one of the most substantial tax advantages available to Australian property investors.

CGT discount for affordable housing: Australian resident individuals who make their property available as affordable rental accommodation for people on low to moderate incomes may access an additional affordable housing CGT discount of up to 10%, raising the maximum available discount from 50% to 60%.

Self-managed super funds: Self-managed superannuation funds (SMSFs) may invest in property subject to strict regulatory requirements, with rental income and capital gains taxed at concessional rates within the fund structure. This area is highly complex, and specialist SMSF advice should always be sought before proceeding.

Do different rules apply to foreign buyers or non-residents purchasing property in Australia?

Yes — and the differences are substantial. Foreign purchasers and non-residents are subject to an additional layer of restrictions, charges, and surcharges that go well beyond those applying to Australian citizens and permanent residents. Taken together, these measures are among the most extensive of any developed nation.

FIRB approval (Foreign Investment Review Board): The majority of foreign nationals and temporary visa holders must apply for and obtain approval from the Foreign Investment Review Board (FIRB) before acquiring residential property in Australia. In general, foreign buyers are restricted to purchasing new dwellings, off-the-plan properties, or vacant land intended for development. Purchasing an established dwelling for personal occupation or as an investment is generally not permitted without specific ministerial approval. FIRB application fees depend on both the property value and the nature of the investor. For residential properties under $1 million, fees start at around $13,200 (as of 2025). Fees for higher-value properties are considerably greater. Always review the current FIRB fee schedule at firb.gov.au.

Foreign buyer stamp duty surcharges: Purchasers who are not Australian citizens or permanent residents will in most cases be liable for a Foreign Buyer Surcharge on top of the standard transfer duty. These surcharges range from 7% to 9% depending on the state (as of 2025). New South Wales imposes Australia’s highest foreign purchaser surcharge at 9% (from January 2025). Victoria and Queensland charge 8%, while Western Australia and South Australia charge 7%.

Foreign surcharge land tax: An additional surcharge land tax of 5% applies to foreign persons holding residential land in New South Wales, with no tax-free threshold attaching to this surcharge. Comparable surcharges operate in Victoria and Queensland and are levied in addition to standard land tax rates.

CGT withholding for non-residents: When a non-resident disposes of or leases Australian property, the purchaser must withhold 15% of the sale proceeds and remit this directly to the ATO (as of 2025). The non-resident seller may subsequently apply for a reduced withholding rate or claim a credit when lodging their Australian tax return.

No main residence CGT exemption for non-residents: Foreign residents cannot access the main residence exemption for CGT purposes, with the result that CGT applies even to a property that served as the owner’s primary home during a period of non-residency. Specialist advice is essential if your residency status changes at any point during ownership.

The framework governing foreign investment in Australian property is both complex and subject to ongoing revision. Before taking any steps, consult the FIRB website and engage a property lawyer or tax adviser with relevant international expertise.

How do I apply to buy property as a foreign buyer in Australia?

1. Check your FIRB status: Determine whether you are classified as a “foreign person” under the Foreign Acquisitions and Takeovers Act. Citizens and permanent residents are generally exempt. Temporary visa holders and non-residents are typically classified as foreign persons.
2. Confirm the type of property you can buy: Foreign persons can generally only purchase new dwellings, off-the-plan properties, or vacant land for development. Purchases of established dwellings are generally not permitted without special ministerial approval.
3. Apply for FIRB approval online: Submit your application at firb.gov.au and pay the applicable application fee. Approval is usually granted for straightforward residential purchases, but processing times can vary — apply early.
4. Calculate your total duty: Work out standard transfer duty plus the applicable foreign buyer surcharge for the state you are purchasing in. Use the relevant state revenue office calculator.
5. Engage a solicitor or conveyancer: Appoint a property lawyer or licensed conveyancer with experience in foreign purchases to review the contract, conduct searches, and manage settlement.
6. Sign the contract: Once FIRB approval is obtained (or you are satisfied it will be granted), you may exchange contracts. Include FIRB approval as a condition if it has not been granted yet.
7. Pay transfer duty: Pay the combined standard duty and foreign surcharge within the required timeframe — typically within three months of signing contracts, or at settlement if earlier.
8. Register the title: Your conveyancer will lodge the transfer for registration with the relevant state land titles office and pay the registration fee. You will receive confirmation of registered ownership.

Frequently asked questions: property taxes in Australia

Do I have to pay stamp duty if I am buying my first home in Australia?

The answer depends on which state or territory you are purchasing in and the value of the property. Most jurisdictions provide full or partial stamp duty exemptions for eligible first-home buyers, generally subject to an upper purchase price limit. For instance, New South Wales exempts qualifying first-home buyers from duty on purchases up to $800,000 (as of 2025–26), while Queensland and Western Australia also offer generous relief for new homes. Contact your state’s revenue office for the current eligibility criteria and thresholds, as these are revised regularly.

Can a non-resident or foreign national buy property in Australia?

As a general rule, foreign nationals and temporary visa holders are limited to purchasing new dwellings or vacant land — not existing established homes — and must first secure approval from the Foreign Investment Review Board (FIRB). Application fees begin at around $13,200 for properties under $1 million (as of 2025). Foreign buyers are also subject to an additional stamp duty surcharge of 7%–9% depending on the state. Visit the FIRB website and seek legal advice before proceeding.

Is my principal home exempt from capital gains tax when I sell?

Yes, for Australian tax residents. The main residence exemption ordinarily means no CGT liability arises on the sale of your home provided it was your primary residence throughout the full period of ownership and was never used to generate income. Partial exemptions apply where you rented out part of the property or it was not your main residence for every year of ownership. The exemption is unavailable to foreign residents. Consult the ATO or a tax adviser for advice tailored to your situation.

Do I pay land tax on my home in Australia?

No — your principal place of residence is generally exempt from land tax in every Australian state and territory. Land tax is typically levied on investment properties, holiday homes, vacant land, and commercial real estate. If you vacate your home and begin renting it out, or if you acquire additional properties, land tax may become applicable. Thresholds and rates differ considerably between states, so check with your state’s revenue office for the specific rules that apply to you.

Is rental income from Australian property taxable if I live overseas?

Yes. Rental income from property situated in Australia is taxable in Australia regardless of where the property owner resides. Non-residents must lodge an Australian tax return each year declaring this income. Non-residents are taxed at different rates and are not entitled to a tax-free threshold. Various expenses may nonetheless be claimed as deductions, including loan interest, management fees, and depreciation. Seek guidance from the ATO or a registered tax agent regarding non-resident tax obligations.

Is there inheritance tax or estate duty on property in Australia?

No. Australia did away with inheritance and estate duties in 1979, and no state or territory has reintroduced them. However, if you inherit Australian property and subsequently sell it, capital gains tax may apply at that point. The CGT cost base is generally reset to the market value of the property at the date of death. Non-resident beneficiaries who sell inherited Australian real estate are subject to a 15% withholding at settlement (as of 2025). A qualified Australian tax adviser should be consulted if you inherit property from overseas.

What is negative gearing and how does it benefit property investors?

Negative gearing describes a situation in which the ongoing costs of holding an investment property — most notably mortgage interest — exceed the rental income the property generates. Under current Australian tax rules, the resulting loss may generally be offset against other assessable income, reducing the investor’s overall tax liability. This can make property investment particularly attractive for those on higher incomes. The treatment of negative gearing has been subject to continued political discussion in Australia, and the rules may be subject to change — always verify the current position with the ATO or a professional tax adviser.

What is a clearance certificate and do I need one when selling property in Australia?

A clearance certificate is a document issued by the ATO confirming that a vendor is an Australian tax resident. Without one, the purchaser is required under the Foreign Resident Capital Gains Withholding rules to retain 15% of the sale price and remit it to the ATO. As of 1 January 2025, the previous $750,000 price threshold has been abolished, meaning the withholding obligation now applies to all property transactions regardless of value. Every vendor — whether a resident or not — should understand these rules. Australian residents can request a clearance certificate through ato.gov.au and are encouraged to do so well before the settlement date, given that processing times may vary.