New Australian tax regime good for foreign property investors

Foreign property fund investors in Australia are soon to benefit from a change to the tax system which will see Australia have one of the most competitive withholding tax rates in the world.

At present, around 3% of money in Australian property funds comes from overseas. In a bid to attract more foreign investment in trust funds, the government are looking to slash taxes charged to overseas investors. The tax reduction is also thought to be part of a long-term strategy by the recently elected centre-left Labour government to help make Australia a financial services hub for the Asia-Pacific region.

The tax stood at 30% and is now being progressively reduced until it reaches just 7.5% in 2010. This is good news for foreign property investors in the country and real estate experts believe that the change in the tax laws will help give a massive boost to Australia’s property market.

Australian property is one of the safer bets for many overseas property investors with houses in the country expected to weather the difficult global financial climate and credit crunch better than other countries. Experts believe that this is due to several factors – in the US and UK, population growth rates are declining in comparison to Australia’s which is growing. With the increase in population comes a strong housing demand and this means house prices are likely to continue to grow. Whilst much of the US and UK’s population is now ageing, Australia is attracting many young, skilled migrants which offsets the effects of the Baby Boom retirees and this ensures that the population media is kept lower than either the US or UK. The supply of extra workers is also helping to create a strong demand for housing.

So, overall, Australian property looks like a fairly safe bet for many foreign property investors.

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