Can non-residents buy property in Australia? This continent is an extremely desirable place in which to invest in real estate. If you are from somewhere else, real estate investment is not prohibited for you. However, there are rules set forth by the Foreign Investment Review Board (FIRB) that you must know about first. What are they? How can you make sure you are in total compliance? Read this guide that is specifically geared towards foreign property buyers in Australia.
Can I buy a property in Australia as a non-resident?
As we just mentioned, yes you can with conditions. One condition is you must apply to the FIRB and pay a fee to them. Another condition is you will only be permitted to purchase either new properties or available vacant land. There are reasons for the conditions. The government of Australia does not want foreign investors to compete with its own residents for existing properties. Existing properties are in short supply in some parts of Australia. The government wants citizens to have a crack at it instead of foreigners. That said, if you plan to add to the housing supply, your plans for foreign property ownership in Australia would be welcomed there.
What kind of property can non-residents buy in Australia?
They can either purchase a new building or one that is under construction. It cannot be a property that has already been sold as a dwelling in the past. The parcel of interest to the overseas buyer also cannot have previously been occupied. If it is being sold by a developer, it may NOT have been occupied within the past 12 months. So, what happens if you violate this rule? If you either, violate the rule or attempt to buy Australian real estate without the approval of the FIRB, you would face three years in prison AND an extremely hefty fine. If an agency was involved in this sale, it would also incur stiff penalties.
However, if you are currently residing in Australia as a foreigner, you may be eligible to purchase one established property as your principal place of residence. You must still obtain FIRB approval and the approval may be subject to certain conditions.
Does buying property in Australia give you residency?
The quick answer is no, it does not. If you are only buying a property you cannot get Permanent Residency status. An exception to that would be if you were applying for a visa in Australia and are using the points system. Also, in some states on this continent, additional points can be earned if you buy either commercial or residential property. Granted, it is tough for a foreigner to buy property in Australia. But, as we noted, it is for good reasons.
Can foreigners buy vacant land in Australia?
Yes, but again, they need to have the approval of the FIRB. This organization will insist the potential buyer meet specific conditions. The conditions include the necessity to build a residential dwelling and have it completed within four years of being approved. Additionally, the buyer has to provide proof of the completion of this dwelling within 30 days. Important note: if the land that is currently vacant once had an established dwelling on it, the FIRB does NOT consider that officially vacant. Therefore, approval for this person for the action of buying property in Australia for non-residents would probably be denied.
What fees should a non-resident pay to buy property in Australia?
First, they have to pay a fee for each application they make or given notice of the application. This is in accordance with the Foreign Acquisitions and Takeovers Act 1975, aka the Act. There will also be a fee due for the house you will be required to purchase.
If your property value increases during your time of ownership, if and when you sell it, you will need to pay a capital gains tax.
If you buy a piece of property in Australia for investment purposes, any income you receive for it MUST be declared. You would do this by filing an Australian tax return. If you incur any repair or maintenance costs, these may be deducted from the tax return.
If you do not live in or rent out this property for at least six months out of every year, you will have to pay an annual vacancy fee. The Australian Taxation Office will determine the amount of your fee.
How to apply for FIRB approval?
An application can be submitted via the Australian government website. The website provides instructions on how to formally apply. Any fees due are required to be paid at the time the application is filed. You will not receive a decision until all fees are paid. Once that is done, it will take about 30 days for you to receive a decision on your application. We can apply for this approval on your behalf.
When to apply for FIRB approval?
When seeking foreign property ownership in Australia, the first thing to do is get approval from the FIRB. There are rules mandated for this, as we have alluded to. The FIRB defines interest in the property as the following actions:
- When you sign a contract, without any conditions, to buy or share ownership in a dwelling;
- When you have a security interest under a real property mortgage. This is necessary even if this person is already a citizen or permanent resident of Australia;
- If you have opted to purchase a property at an agreed price at a future date;
- If at the time an interest in a leasehold agreement is expected to exceed five years, you must have FIRB approval;
- If you already have an interest in the ownership of a dwelling, and you increase your share of that ownership, it must be approved;
What is the process for buying a house in Australia and its related law conveyancing?
If you have not yet decided what property you want to buy, then at this stage it makes sense to contact a Buyers’ Agent or some Property Advisor. We have also compiled a detailed guide on how conveyancing works from choosing a house to handing over the keys to your hands.
Who can help non-resident with the paperwork to buy a house in Australia?
In a nutshell, it is the conveyance solicitor. They are the ones who facilitate all real estate transactions in Australia. They will advise a buyer of all necessary steps whether they are an Australian resident or an overseas buyer of property in Australia. When acting for foreign investors, we will include a ‘subject to FIRB’ clause in contracts which makes the contracts conditional on FIRB providing approval. This means that if FIRB approval is denied or not granted within a certain period, contracts can be cancelled, and depending on the clause, the deposits may be returned.
If you are from New Zealand, Australia already has special property buying agreements with your homeland. It is a good idea to know all applicable laws and rules regarding a potential purchase of Australian property. A conveyance solicitor knows them inside and out and will help you.
We are conveying solicitors in Queensland and the NSW with almost 30 years of experience, so if you would like to know more about property transfers, just send an email or call us, it’s free. If you have already chosen a type of property and want to know the details of how much the transfer of your property can cost, just fill in the Instant Quote, it’s also free.
Note: This article is intended to provide a general overview of only a few circumstances where Foreign Buyers are required to apply for approval from the Foreign Investment Review Board (FIRB). Please ensure that you seek legal advice from us regarding whether you are required to apply for FIRB.