Guide to Property Taxes in Australia
Tax Rate on Rental Income |
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| Monthly Income | €1,500 | €6,000 | €12,000 |
| Tax Rate | 32.50% | 32.50% | 33.30% |
Nonresidents are taxed only on their Australian-sourced income. Married couples are taxed separately. The tax year in Australia starts on 1 July and ends on 30 June the following year.
Income Tax
Income is taxed at progressive rates. Nonresident individuals are subject to tax at the following rates:
Income Tax for Foreign Residents:
| Taxable Income (AUD) | Tax Rate |
| Up to 135,000 | 30.00% |
| 135,001 – 190,000 | 37.00% on band over AUD 135,000 |
| Over 190,000 | 45.00% on all income over AUD 190,000 |
| Source: Global Property Guide, PWC | |
Rental Income
Expenses that can be claimed include advertising costs (for tenants), bank charges, body corporate fees, borrowing expenses, council rates, depreciation (decline in value of depreciating assets), insurance, land tax, property agent fees or commissions, repairs and maintenance (stationery, telephone, water charges, gardening and mowing, pest control), and travel undertaken to inspect the property or to collect the rent.
Capital Gains
Capital gains on the disposal of assets are liable to tax at the standard income tax rates. The capital gain is computed by deducting the 'cost base' from the gross selling price or fair market value of the property when it was sold.
The 'cost base' of the property is the sum of the following amounts:
- Acquisition cost of the property
- Incidental expenses of buying and selling the property
- Improvement costs
- Non-capital costs of ownership of an asset acquired on or after 21 August 1991 (e.g., interest on borrowing to purchase the asset, rates and land taxes, repair and maintenance expenditure) to the extent that these are not otherwise deductible
Indexation:
- The cost base of the property sold within one year of acquisition cannot be indexed.
- Otherwise, the cost base can be indexed (except for non-capital costs of ownership of an asset). The indexation method that can be applied depends on the date the property was acquired.
- For assets acquired by individuals on or after 21 September 1999, the unindexed capital gain (known as discount capital gain) is reduced by 50%. The taxable capital gains are 50% of the cost base.
- For assets acquired before 21 September 1999, the cost base was indexed according to movements in the consumer price index and indexation is frozen as at 30 September 1999.
Corporate Taxation
Income Tax
Corporate income tax is levied on:
- Sale of goods
- Provision of services
- Dividends, interest, royalties, rent, and
- Capital gains
Income and capital gains earned by companies are taxed at the corporate tax rate of 25% to 30%. The lower tax rate is applicable only to companies that, along with specific 'connected' entities, have a combined annual turnover of less than 50 million Australian dollars (AUD). Income-generating expenses are deductible when calculating taxable income.
Buying and Selling Costs
| Cost Type | Cost Percentage/Amount |
| Property Transfer Tax | 1.00% - 6.50% |
| Agent Fee Buyer | - |
| Agent Fee Seller | 2.00% - 2.50% |
| Legal | 0.50% - 1.00% |
| Notary | 0.10% - 0.50% |
| Costs Paid By Buyer | 1.60% - 8.00% |
| Costs Paid By Seller | 2.00% - 2.50% |
| Roundtrip Cost | 3.60% - 10.50% |
| Source: Global Property Guide, PWC | |
Property Holding Tax
Land Tax
Land tax is an annual tax levied on all real estate properties, payable by the owner. Exemptions to land tax are extended in most states to a person’s primary place of residence and to farms. The tax base is the assessed value of the property.
New South Wales:
| Tax Base (AUD) | Tax Rate |
| Up to 1,075,000 | AUD 100 |
| 1,075,001 - 6,571,000 | 1.6% on band over AUD 1,075,000 |
| Over 6,571,000 | 2% on all value over AUD 6,571,000 |
| Source: Global Property Guide, NSW Office of State Revenue | |
Victoria:
| Tax Base (AUD) | Tax Rate |
| Up to 50,000 | 0% |
| 50,000 - 100,000 | AUD 500 |
| 100,000 - 300,000 | AUD 975 |
| 300,000 - 600,000 | AUD 1,350 plus 0.30% on band over AUD 300,000 |
| 600,000 - 1,000,000 | AUD 2,250 plus 0.60% on band over AUD 600,000 |
| 1,000,000 - 1,800,000 | AUD 4,650 plus 0.90% on band over AUD 1,000,000 |
| 1,800,000 - 3,000,000 | AUD 11,850 plus 1.65% on band over AUD 1,800,000 |
| Over 3,000,000 | AUD 31,650 plus 2.65% on band over AUD 3,000,000 |
| Source: Global Property Guide, State Revenue Office Victoria | |
Australia Capital Territory (ACT):
| Tax Base (AUD) | Tax Rate |
| Up to 150,000 | 0.54% |
| 150,000 - 275,000 | AUD 810 plus 0.64% on band over AUD 150,000 |
| 275,000 - 2,000,000 | AUD 1,610 plus 1.12% on band over AUD 275,000 |
| Over 2,000,000 | AUD 20,390 plus 1.14% on band over AUD 2,000,000 |
| Source: Global Property Guide, ACT Revenue Office | |
