Victoria Reduces Foreign Investor Tax Burden

Victoria has moved to make selected property developments more attractive to overseas-backed investors by easing part of its foreign investor tax framework.

The State Government announced targeted relief from the Absentee Owner Surcharge for qualifying developments. Eligible projects can receive relief during construction and, in some cases, for up to two years after completion, giving developers more time to sell or lease newly built homes.

The aim is to improve development viability and encourage capital into projects that add new housing supply. This could be particularly relevant to Melbourne’s western growth corridor, where large residential estates, townhouses, apartments and land developments continue to play a major role in Victoria’s future housing pipeline.

Greater certainty around holding costs may encourage more overseas-backed developers to commit to projects, potentially supporting land sales, construction activity and the delivery of additional homes across the west.

For buyers, increased development could ultimately mean more choice across different property types and price points. For developers, stronger investor interest may help projects progress from planning into construction more quickly.

However, foreign purchasers still face significant taxes. Victoria’s Foreign Purchaser Additional Duty remains at 8%, while the Absentee Owner Surcharge remains 4% unless an exemption applies.

This means the latest changes are targeted rather than a broad tax cut. The strongest incentives are directed toward projects that contribute to new housing supply and economic activity.

For Melbourne’s western growth corridor, that policy direction could strengthen interest in new developments and residential land, helping support future housing delivery as the region continues to expand.