Real Estate Witholding Tax
By Joe Vizzone
Property buyers should be aware that as from the 1st July 2016, purchasers of Australian real estate from foreign resident owners may be obliged to pay 10% of the purchase price to Australian Taxation Office as withholding tax.
In an apparent crackdown on foreign residents not paying Capital Gains Tax on the sale of Australian Real Estate, the onus is now upon a buyer who could be liable to the Australian Taxation Office for 10% of the purchase price plus interest, if the new law is not strictly adheard to.
The new law applies to:1.All properties sold for over $2million.2.Which are owned by overseas residents including Australian Citizens living overseas.3.The Purchaser knows or reasonably believes that the Vendor is a foreign resident.4.The Purchaser has a record that the Vendor has an overseas address or the Purchaser is required by the Vendor to make payment to a place overseas.
The payment will not apply if the purchaser obtains a clearance Certificate from the Australian Taxation office before settlement.
The new law can have serious consequences for property buyers.
Joe Vizzone from our firm has been dealing in property transactions for over 30 years and can help you navigate the many pitfalls that can arise in the seemingly “easy” task of buying or selling a property. Call (02) 9667 1271 to speak to Joe Vizzone