Navigating the 2026 Ban: A Guide to Buying NSW Property as an Overseas Investor

Buying property in New South Wales (NSW) as an overseas investor in 2026 is significantly stricter and more expensive than in previous years. The Australian Government has implemented a ban on foreign investors buying established homes that runs through 2026, meaning your options are largely restricted to new builds or vacant land.

The following guide details the step-by-step process, the specific costs for 2026, and the critical rules you must follow.

1. The Critical Rule for 2026: The "Established Home" Ban

Before starting, you must understand the primary restriction currently in place.

• The Ban: From April 1, 2025, to March 31, 2027, foreign investors are generally banned from buying existing (established) homes. 

• What you CAN buy:
  

  • New Dwellings: Properties that have never been lived in or sold before.

  • Vacant Land: You must build a residential dwelling on it within 4 years. 

  • Off-the-plan: Apartments or homes currently under construction.

• Exceptions: You may only buy an established home if you plan to demolish and redevelop it (to increase housing stock) or if you are a temporary resident living in it for work/study (requires selling when you leave).

2. Step-by-Step Buying Process

Step 1: Apply for FIRB Approval (Before You Buy)

You strictly cannot sign an unconditional contract without approval from the Foreign Investment Review Board (FIRB) (managed by the ATO).

• Action: Submit a residential real estate application via the ATO website.

• Timing: You must do this before signing a contract, or sign a contract "subject to FIRB approval." If you buy at auction, you must have approval before the hammer falls.

• Fee: You must pay an application fee (see costs below) before your application is processed.

Step 2: Secure Your Property

Once approved (usually takes up to 30 days), you can purchase the property.

• Note: Your approval is usually specific to a property address or a specific development. If you are buying a new apartment, the developer may have already obtained a "New Dwelling Exemption Certificate," which saves you from applying individually—ask the developer about this.

Step 3: Pay NSW Taxes & Surcharges

NSW charges "surcharge" taxes specifically for foreign buyers. These are paid on top of standard taxes.

• Surcharge Purchaser Duty: You will pay an extra 9% of the purchase price in stamp duty
• Standard Stamp Duty: You still pay the normal transfer duty rates applicable to all buyers.

Step 4: Post-Purchase Compliance

• Register the Asset: You must register the property on the Register of Foreign Ownership of Australian Assets within 30 days of settlement.

• Vacancy Fee Return: Every year, you must lodge a return with the ATO proving the property is not vacant.

 

3. Costs & Taxes (2026 Estimates)

Investing in NSW requires a significant upfront capital buffer due to surcharges and fees.

Example Calculation: If you buy a $1,000,000 new apartment in Sydney:

• Price: $1,000,000

• FIRB Fee: ~$15,100

• Standard Stamp Duty: ~$40,490

• Foreign Surcharge (9%): $90,000

• Total "Government" Costs: ~$145,590 (approx. 14.5% on top of purchase price)

 

4. Ongoing Holding Costs

Once you own the property, there are specific annual costs for foreign owners in NSW.

• NSW Land Tax Surcharge: You must pay an annual surcharge of 5% of the unimproved land value (not the property value). There is no tax-free threshold for foreign owners; you pay this from the first dollar of land value.
• Vacancy Fee (Federal): If the property is left vacant for 6+ months in a year, the ATO charges a vacancy fee. This fee is generally double your original FIRB application fee (e.g., ~$30,000+ per year). To avoid this, the property must be occupied or genuinely available for rent.

Summary Checklist for 2026

1. [ ] Budget an extra ~15% on top of the purchase price for taxes/fees.
2. [ ] Confirm the property is a "New Dwelling" (not established).
3. [ ] Apply for FIRB approval via the ATO portal.
4. [ ] Pay the FIRB fee immediately to start the 30-day assessment clock.
5. [ ] Sign contract only after approval (or with a "subject to FIRB" clause).

Disclaimer

The information provided in this response is for general informational purposes only and does not constitute legal, financial, or professional investment advice.

Foreign investment laws in Australia, including FIRB thresholds and state-specific surcharges, are subject to frequent legislative changes. While this information is based on the regulations applicable in 2026, you should be aware of the following:

• No Professional Relationship: Use of this information does not create a client-consultant or legal relationship.
• Seek Expert Advice: Property investment involves significant financial risk. You should consult with a qualified Australian legal practitioner, a registered tax agent, and a licensed financial advisor before making any purchase or submitting government applications.
• Accuracy: While every effort is made to ensure accuracy, the specific details of your visa status, residency, or the property’s classification can drastically change your legal obligations and tax liabilities.
• Government Authority: Final approval for any investment rests solely with the Foreign Investment Review Board (FIRB) and the Australian Taxation Office (ATO).

Sources:

1. https://foreigninvestment.gov.au/guidance/types-investments/residential-land/
2. https://www.ato.gov.au/
3. https://hlb.com.au/foreign-surcharges-in-nsw
4. https://www.canstar.com.au/home-loans/australian-property-market-foreign-investment-rules/