Will the floodgates open to remove the surcharge on taxes when buying and owning foreign real estate?

The State of New South Wales (NSW) has announced the removal of tax levies on the purchase and ownership of property for foreign nationals from New Zealand, Finland, Germany and South Africa. These tax levies were introduced in 2016 by the NSW Government for foreign residential real estate investors to increase revenue.

The tax levy rates were originally 4% tax on property purchases and 0.75% land tax annually for owners. In subsequent years, these rates were raised to 8% and 2% respectively, and from 2023, land tax will already be 4%.

The question arises, however, as to whether this exemption can be extended to other countries that also have tax treaties with similar non-discrimination provisions. Citizens of these countries can complain about their tax levies and test their position in court.

This initiative is applicable not only in NSW, but across Australia, which also levies property purchase taxes and land taxes on foreign investors.