Foreign Purchaser Additional Duty Victoria 2026: Budget Update

The 2026-27 Victorian Budget was handed down on 5 May 2026. For foreign buyers, expat clients and trustees of property-owning structures, the headline is clear: the Budget announced no changes to the Foreign Purchaser Additional Duty (FPAD) or the Absentee Owner Surcharge (AOS). Existing settings continue, including the build-to-rent exemption and the significant economic contribution exemption. Here is what the Budget Papers say, with citations to the source. For specific rate structures and qualifying tests, defer to the State Revenue Office at sro.vic.gov.au.

Foreign Purchaser Additional Duty (FPAD): what it applies to

FPAD is an additional land transfer duty that applies to acquisitions of residential property in Victoria by foreign purchasers. It applies on top of standard land transfer duty (stamp duty) on the same transaction. The 2026-27 Budget Papers do not announce any change to its scope, rate or operation (BP5 Ch.4). For the current FPAD rate, the definition of a foreign purchaser, and the qualifying tests for corporations, trusts and individuals, the authoritative source is the State Revenue Office at sro.vic.gov.au.

Absentee Owner Surcharge: what it applies to

The Absentee Owner Surcharge is an additional land tax surcharge that applies to taxable Victorian land owned by absentee owners. It applies on top of the standard land tax assessment. The 2026-27 Budget Papers do not announce any change to its scope, rate or operation (BP5 Ch.4). For the current surcharge rate, the definition of an absentee owner and the qualifying tests applicable to individuals, corporations and trusts, refer to sro.vic.gov.au.

The 2026-27 Budget: no changes

The 2026-27 Budget Papers announce no new measures affecting FPAD or the Absentee Owner Surcharge. Both continue under settings already in law (BP5 Ch.4). The Budget also announces no changes to the Vacant Residential Land Tax or the Windfall Gains Tax. For the broader Budget context, including the off-the-plan stamp duty concession extension and other property-related measures, see our Victorian Budget 2026-27 property guide and the related stamp duty article.

Exemptions that continue (build-to-rent, significant economic contribution, corporations and trustees)

The Budget Papers confirm that existing exemptions continue. The Absentee Owner Surcharge exemption for build-to-rent projects and for significant economic contributions to Victoria carries forward. The FPAD exemption for corporations and trustees that meet the qualifying tests also continues. The Budget does not flag any review or sunset of these exemptions. The qualifying tests are administered by the State Revenue Office, and prospective applicants should refer to sro.vic.gov.au for current eligibility criteria.

The numbers: forgone revenue from FPAD and AOS exemptions

The Budget Papers quantify the forgone revenue from these exemptions in 2026-27 (BP5 p.196):

• Absentee Owner Surcharge exemption (build-to-rent and significant economic contribution combined): $386 million forgone in 2026-27.
• FPAD exemption for corporations and trustees: $40 million forgone in 2026-27.
• Build-to-rent land tax discount: $6 million forgone in 2026-27, growing to $14 million by 2029-30.

These figures are estimates of revenue not collected because of the exemptions. They reflect the scale of activity that currently sits within the exempt categories. The Budget does not announce any change to how these figures are calculated or how the exemptions apply.

Federal Court class action update (limited to pre-1 January 2018 revenue)

The Budget Papers note that a Federal Court class action against the Foreign Purchaser Additional Duty and the Absentee Owner Surcharge has been narrowed to pre-1 January 2018 revenue only, following an October 2025 High Court judgment. The Budget states the financial impact is “unable to be quantified” at this time (BP5 p.205). The Budget does not indicate any change to current FPAD or AOS settings as a result of the proceedings. For context on the broader land tax framework, see our land tax article.

What buyers and trustees should check before signing

For foreign buyers, expat clients and trustees of property-owning structures, FPAD and AOS settings continue as they were before the Budget. Before signing a contract, confirm with the State Revenue Office whether the purchaser is treated as foreign for FPAD purposes, whether the owner is treated as absentee for AOS purposes, and whether any exemption applies. Our house conveyancing service covers FPAD-affected purchases. For transactions where AOS or build-to-rent considerations apply, our commercial conveyancing service is the right starting point.

Frequently asked questions

Did Foreign Purchaser Additional Duty change in the Victorian Budget 2026? No. The 2026-27 Victorian Budget announced no changes to the Foreign Purchaser Additional Duty. Existing settings continue (BP5 Ch.4). For the current rate and qualifying tests, refer to the State Revenue Office at sro.vic.gov.au.

What is the Absentee Owner Surcharge in Victoria? The Absentee Owner Surcharge is an additional land tax surcharge that applies to taxable Victorian land owned by absentee owners, on top of standard land tax. The 2026-27 Budget announced no changes to the surcharge (BP5 Ch.4). For current rates and the definition of an absentee owner, refer to sro.vic.gov.au.

Are build-to-rent projects exempt from the Absentee Owner Surcharge? The Budget Papers confirm that the build-to-rent exemption from the Absentee Owner Surcharge continues. Combined with the significant economic contribution exemption, the forecast forgone revenue is $386 million in 2026-27 (BP5 p.196). For the qualifying criteria, refer to the State Revenue Office.

Is there a class action against Foreign Purchaser Additional Duty? A Federal Court class action against FPAD and the Absentee Owner Surcharge has been narrowed to pre-1 January 2018 revenue only, following an October 2025 High Court judgment. The Budget states the financial impact is “unable to be quantified” at this time (BP5 p.205).

Do trustees or corporations pay FPAD? The Budget Papers refer to an FPAD exemption for corporations and trustees, with forecast forgone revenue of $40 million in 2026-27 (BP5 p.196). The qualifying tests for this exemption are administered by the State Revenue Office. Trustees and corporations should refer to sro.vic.gov.au to confirm whether the exemption applies to their specific structure.

Speak to Tick Box Conveyancing

If you are a foreign buyer, an expat returning to the Victorian market, or a trustee of a property-owning structure, the FPAD and AOS settings that applied before the 2026-27 Budget continue to apply. Tick Box Conveyancing can help you understand how the rules apply to your transaction, work with the State Revenue Office on exemption matters, and progress your settlement with confidence. Get an instant quote or contact us to talk through your matter.

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This article summarises the Victorian Budget 2026-27 as published on 5 May 2026. It is general information, not legal advice. For matters specific to your transaction, contact Tick Box Conveyancing.