Although it may seem strange to some of us to buy a home and then leave it empty, foreign investors have been doing this with increased frequency in recent years. This is often because they are using the property to store value rather than generate returns, but regardless of the reason this will soon be subject to a tax.

The law applies to any ‘foreign owner’, but note that this definition includes anyone living overseas or to companies and other entities owned by a person living overseas. It applies to any residential property acquired after 9 May 2017 and occupied for less than 6 months per year, with the ‘year’ commencing when the foreign person acquires the property. Occupation means that the owner or a relative is living there or that the property is leased out. Properties available to lease, but vacant in the meantime, will count as occupied.

For most foreign owners, the most important provision will be the requirement to lodge an annual ‘vacancy tax return’ after every year of owning the property. They will also have to maintain records in case they are audited. The tax is based on the FIRB notification fee, which can be calculated here and is based on the value of the property.

Talk to your tax advisor to ensure you are compliant with the new requirements.

The information contained in this blog is general in nature and does not take into account your personal circumstances. You are advised to seek independent advice from a Financial Adviser before acting on any information contained herein.