Victoria cuts tax on foreign property investors

The Victorian Government has announced plans to ease the Absentee Owner Surcharge for eligible developments, recognizing that attracting investment can help get more homes built.

Introduced in 2016, the surcharge adds an extra 4 per cent fee for foreign investors who do not reside in Victoria, and the government will slash it to attract investment back to the state.

The government’s recent announcement outlines changes to the Absentee Owner Surcharge exemption guidelines, which will provide relief to developers who meet the Development Facilitation Program’s criteria during construction.

Targeted Relief for Developers

Eligible residential developments could receive an exemption for up to two years after completion, allowing more time to sell or lease their stock.

The announcement also includes formalizing a one-year exemption following construction for the sale of land, regardless of its type.

These are targeted changes to the surcharge, and the announcement should be understood as proposed relief with eligibility requirements, rather than as an across-the-board removal of foreign investor taxes.

Encouraging Overseas Capital

Encouraging overseas capital into housing development could help projects proceed and support jobs and rental supply.

A foreign institution partnering with an Australian developer can help fund a project that ultimately provides homes for Australians to buy or rent, as well as jobs for local builders, tradespeople and suppliers.

Reducing an ongoing tax burden can improve those numbers, particularly when developers are holding completed stock while arranging sales or leases.

Competing for Mobile Money

Victoria has been competing for mobile money, and international investors have choices about where to put their capital.

In October 2025, the Property Council of Australia released Mandala Partners’ research, which reported that global investment in Victorian property had fallen by 53 per cent over three years, from more than $10 billion to around $5 billion.

The same industry-commissioned modelling estimated that reducing the surcharge could attract an additional $5.7 billion in Victorian investment by 2030.

For long-term investors, this change in direction is a reason to keep assessing Melbourne’s opportunities carefully and with an open mind.

The aim is to make a well-informed purchase you can comfortably hold through changing markets while building wealth over time.

As a Senior Wealth Strategist at Metropole, Joseph focuses on ensuring all clients grow, protect, and pass on their wealth by assisting them in the strategic selection, financing, acquisition, and management of their investment properties.