Whether purchasing Australian residential property requires foreign investment approval, commonly called FIRB approval, and whether a buyer is exempt from NSW’s 9% surcharge purchaser duty are two questions that must be considered separately.
FIRB is part of the federal foreign investment regime and principally determines whether a buyer needs government approval to purchase Australian residential property. Foreign buyer surcharge purchaser duty is part of the NSW tax regime and depends not only on the buyer’s visa and status but also on how long the buyer has actually lived in Australia.
Accordingly, a person who has just obtained Australian PR may no longer need FIRB approval but may still have to pay foreign buyer surcharge purchaser duty equal to 9% of the property’s price.
Why Do PR Holders Usually Not Need FIRB Approval but May Still Have to Pay the 9% Surcharge?
Under the federal foreign investment regime, Australian citizens and permanent residents, as well as New Zealand citizens who hold or are eligible to hold a Subclass 444 Special Category visa, generally do not need FIRB approval to purchase residential property.
However, NSW’s foreign buyer surcharge purchaser duty uses different criteria.
Whether a permanent resident is exempt from the 9% surcharge requires a further assessment of whether they meet the requirement to be “ordinarily resident in Australia” or qualify for a particular principal place of residence exemption.
For a person who has recently obtained PR or a permanent resident who has lived overseas for a long period, liability for the surcharge cannot be determined from PR status alone. The person’s actual residence before the contract was signed and their plans to occupy the property after purchase must also be examined.
These issues are best confirmed before the contract is signed because the liability date for surcharge purchaser duty is generally connected with the contract date, rather than being assessed only at settlement or after the property has been acquired.
Already Resident in Australia for 200 Days Before Signing the Contract
If a permanent resident has actually lived in Australia for at least 200 days during the 12 months before signing the contract, they can generally meet the relevant residence requirement and avoid foreign buyer surcharge purchaser duty.
The 200 days do not have to be continuous.
A buyer may enter and leave Australia several times during the preceding year, provided their total residence during the relevant 12-month period reaches 200 days. The days of arrival and departure may also count when calculating actual residence.
For example, suppose a permanent resident plans to sign a property contract on 1 October 2026. Their actual arrival and departure records during the relevant 12-month period must be examined. If they have lived in Australia for a total of 220 days, they can generally still meet the 200-day residence requirement even if they travelled overseas several times during that period.
By contrast, if the buyer has just obtained PR or has worked overseas for a long period and has lived in Australia for only 100 days during the relevant period, PR status alone cannot establish an exemption from the surcharge. It is then necessary to consider whether the principal place of residence exemption may apply.
What If You Have Not Lived in Australia for 200 Days Before Signing the Contract?
Not reaching 200 days during the preceding 12 months does not necessarily mean a permanent resident must pay the 9% surcharge.
If a permanent resident purchases a property in their individual name and intends to use it as their principal place of residence, the principal place of residence exemption may still apply if the conditions are met.
These circumstances generally require attention to the buyer’s status, the use of the property and the buyer’s actual residence after the purchase. The property must genuinely be the buyer’s principal place of residence, rather than an investment property or holiday home, and the prescribed time for moving in and continuous-residence requirements must also be met.
A particular source of confusion is that the test for past residence and the residence test for a future principal place of residence exemption are not exactly the same.
The 200 days in the preceding 12 months can generally be accumulated and need not be continuous. However, a buyer relying on post-purchase occupation as their principal place of residence must pay particular attention to the continuous-residence requirement. Put simply, two separate periods of 100 days do not automatically amount to 200 days of continuous residence.
For example, a buyer has just obtained PR and lived in Australia for only 120 days during the relevant pre-contract period. If the buyer purchases a home in their individual name, moves in within the prescribed period and satisfies the continuous-residence requirement, they may still obtain an exemption from the surcharge.
By contrast, if the property is purchased as an investment and will continue to be rented to tenants, or the buyer cannot meet the prescribed continuous-occupation requirement because of work or other reasons, the buyer generally cannot rely on this principal place of residence exemption.
Can Subclass 309 and 820 Partner Visa Holders Also Be Exempt?
In addition to permanent residents, some other visa holders may receive treatment different from ordinary temporary visa holders if they meet the relevant conditions.
For example, holders of temporary Subclass 309 or 820 Partner visas, as well as some eligible New Zealand citizens and holders of specified retirement visas, may require further assessment according to their particular status and actual residence.
However, this does not mean that every temporary visa holder is subject to the same rules.
Holders of student visas, ordinary temporary work visas and some bridging visas may still be treated as foreign buyers under NSW’s foreign buyer surcharge purchaser duty regime. The assessment therefore cannot be based simply on whether a person has lived in Australia for a long time; both the visa category and the applicable tax rules must be checked.
Why Can a Joint Purchase With an Australian-Citizen Spouse Still Attract the Surcharge?
Different statuses between spouses are among the circumstances in which FIRB and NSW surcharge purchaser duty are most easily confused.
Under the federal foreign investment regime, when a foreign person purchases residential property jointly with a spouse who is an Australian citizen, permanent resident or eligible New Zealand citizen, the foreign spouse may qualify for a FIRB spousal exemption if the prescribed ownership structure and other conditions are met.
However, NSW’s foreign buyer surcharge purchaser duty does not have an identical spousal exemption.
Therefore, even if the entire purchase does not require FIRB approval, this does not necessarily mean the foreign spouse is exempt from surcharge purchaser duty. NSW may still assess each buyer’s status separately and calculate the surcharge on the ownership share acquired by the foreign buyer.
For example, an Australian citizen and a spouse holding a student visa jointly purchase a residential property worth AUD 1 million. If the foreign spouse acquires a 50% ownership share and is a foreign buyer liable for the surcharge, the surcharge may be calculated as AUD 1 million multiplied by 50% and then by 9%, producing AUD 45,000.
If the foreign buyer alone acquires a 100% ownership share, or the entire ownership is acquired by persons liable for foreign buyer surcharge purchaser duty, the 9% surcharge on the same AUD 1 million property may reach AUD 90,000.
Accordingly, “no FIRB approval required” and “no foreign buyer surcharge purchaser duty payable” are not equivalent.
What Should Be Confirmed Before Making an Offer or Signing a Contract?
Buyers who have just obtained PR, have worked overseas for a long period or have frequently entered and left Australia during the preceding year should check their actual days of residence before signing a contract. A difference of several weeks in the contract date can sometimes affect whether the relevant 200-day residence requirement is met.
If the spouses have different visa statuses, or the property will be jointly held through arrangements involving a spouse, parents, company or trust, the FIRB requirements, ownership structure, ownership shares and surcharge purchaser duty liability must all be considered together.
Changing the buyer’s name or ownership structure after signing may also create a new contract, stamp duty or other legal issues, so it should not be regarded as a simple “name change”.
A buyer intending to rely on the principal place of residence exemption should also confirm before signing whether the future occupation arrangements can meet the requirements. Only by considering status, actual residence, property use and ownership structure together can the buyer determine more accurately whether the additional 9% tax is payable.
Frequently Asked Questions
I Already Have PR but Have Frequently Travelled Overseas During the Past Year. Do I Still Have to Pay the 9% Surcharge?
The buyer’s actual days of residence in Australia during the prescribed period before the relevant liability date must be calculated. If the relevant 200-day residence requirement is met, an exemption may generally be available, and the past residence does not necessarily have to be continuous. If the buyer has not reached 200 days, it is necessary to consider whether the principal place of residence exemption may apply.
I Had Not Reached 200 Days When I Signed the Contract but Reached It Before Settlement. Can I Be Exempt?
Past residence cannot simply be recalculated using the settlement date because the relevant tax liability is generally connected with the contract date. However, an eligible permanent resident who purchases the property as their principal place of residence and meets the prescribed continuous-residence requirement after purchase may receive the relevant treatment through the principal place of residence exemption.
If I Buy a Home Jointly With My Australian-Citizen Spouse, Do I Still Have to Pay the 9% Surcharge?
Each spouse’s status must be assessed separately. Even if FIRB approval may not be required at the federal level, NSW may still impose the 9% surcharge on the ownership share acquired by the spouse who is a foreign buyer. For example, if the foreign spouse acquires a 50% share in a residential property worth AUD 1 million, the corresponding surcharge may be AUD 45,000.
Are Temporary Subclass 309 or 820 Partner Visas Treated the Same as Other Temporary Visas?
Not necessarily. Holders of Subclass 309 or 820 visas may receive treatment different from ordinary temporary visa holders if the relevant conditions are met. Holders of student visas, ordinary work visas and some bridging visas generally require separate assessment under the rules applying to foreign buyers.
NS Legal’s Closing Note
For property purchases in Australia, FIRB and foreign buyer surcharge purchaser duty are two different regimes. Obtaining PR does not mean every tax issue concerning foreign buyers automatically disappears.
If you have recently obtained PR, frequently travelled in and out of Australia during the preceding year, or intend to purchase property jointly with a spouse who has a different visa status, NS Legal’s conveyancing lawyers can assess before you sign whether FIRB approval or NSW’s 9% foreign buyer surcharge purchaser duty applies. They can also assess the actual tax liability by considering residence, the intended use of the property, ownership shares and the ownership structure.
If you intend to rely on the principal place of residence exemption, it is also advisable to confirm before signing whether your occupation plans can meet the relevant requirements and to deal with contract review, stamp duty filing and settlement arrangements in advance, avoiding additional costs caused by an unsuitable contract date or ownership structure.
