When considering to buy property in Australia as a foreigner, it’s crucial to understand the legal framework and any limitations that may apply. Non-citizens can generally buy property in Australia, but there are certain rules and regulations they need to adhere to. Understanding these requirements can help streamline the process and ensure a smooth transaction.
Buy Property in Australia as a Non-Citizen
Many foreigners find investing in Australian real estate appealing. While it’s feasible to do so, investing from abroad presents additional hurdles.
Here, we provide a detailed overview of the steps involved in buying property in Australia as a non-citizen, highlighting specific requirements, regulations, and limitations to consider.
Is it Possible for Foreigners to Buy Property in Australia?
While foreigners are allowed to buy property in Australia, certain restrictions and regulations govern their purchases. Understanding these limitations can help non-Australian buyers navigate the property market more effectively and make informed decisions.
What Non-Australian Citizens Need to Know to Buy Property in Australia
Foreign investors seeking to buy property in Australia must obtain approval from the Foreign Investment Review Board (FIRB), a government entity tasked with overseeing foreign investments and property acquisitions.
The FIRB imposes specific regulations, permitting foreign buyers to purchase only certain types of properties, primarily new dwellings. To buy land or property in Australia, foreign investors must apply to the FIRB for authorisation.
Obtaining FIRB approval entails an application fee, which varies depending on the property’s value. Generally, fees are higher for more expensive properties or land. The application process typically takes up to 30 days, and skipping this process can result in severe penalties for non-compliance.
Foreign buyers must also secure approval for a non-resident home loan from lenders, who assess foreign income differently. Lenders may consider only a portion (between 50-100%) of an individual’s net earnings to account for potential fluctuations in income stability.
To obtain loan approval, foreign buyers must provide evidence of their foreign income in English or enlist the services of a licensed interpreter for translations.
Exceptions to FIRB Approval Requirement for Foreign Investors
Under normal circumstances, foreign nationals and temporary residents are obligated to seek approval from the Foreign Investment Review Board (FIRB) prior to purchasing property in Australia. However, there exists a significant exception to this rule:
Foreign individuals who are purchasing property jointly with an Australian citizen, a holder of a permanent Australian visa, or a citizen of New Zealand are not required to obtain FIRB approval before completing their property purchase.
This exception allows for streamlined property transactions for foreign investors engaging in joint ownership arrangements with eligible Australian or New Zealand partners. It promotes collaboration and cooperation between international investors and local residents, while also facilitating smoother property transactions and enhancing the efficiency of the real estate market.
What is the Annual Vacancy Charge
Non-residents who intend to buy property in Australia but neither reside in it nor rent it out for at least six months per year are liable for an annual vacancy charge.
The Australian Taxation Office (ATO) determines the amount of this charge, typically during the submission of annual vacancy fee returns by non-resident owners of Australian real estate.
Understanding Tax Obligations for Investment Properties in Australia
If you own an investment property in Australia, you need to report the income it generates by filing an Australian tax return. On the bright side, you can deduct maintenance costs for the property from your taxable income.
When you eventually sell the property, you might have to pay capital gains tax (CGT) if its value has increased during your ownership.
If you’re living abroad and need help navigating Australian tax laws related to property ownership, we can connect you with a trusted Australian tax specialist. They can provide you with a free introduction and an initial consultation to assist you further.
Deposit Foreign Investors Need
While typical home buyers are often asked to provide a 20% deposit for their home loan, foreign investors may be required to supply a higher deposit of around 30% by many lenders. Seeking assistance from a knowledgeable mortgage broker can streamline this process, increasing your chances of securing approval for a home loan from a specialized lender in a timely and cost-effective manner.
Furthermore, lenders offering mortgages to foreign investors may also apply higher interest rates compared to standard rates.
What are the Fees for Foreigners Buying Property
When looking to buy property in Australia, foreign buyers must consider several fees, including the application fee for FIRB approval. This fee varies based on the property’s value, with higher-priced properties incurring higher application fees.
For instance, properties valued below $75,000 require a $2,000 application fee, while properties over $9 million incur a fee of $114,300. The fees can escalate to a maximum of $503,000 for residential properties valued at $40 million.
In addition to FIRB approval fees, foreign buyers must also account for the Foreign Citizen Stamp Duty charge. This charge is an additional fee imposed on top of standard home-purchasing fees and applies regardless of citizenship status. The amount of this stamp duty can differ depending on the state where the property is being purchased. For instance, in New South Wales, there is currently an 8% surcharge for foreign citizens, which should be factored in during the property hunting process.
Connect with an Australian Property Specialist
Take advantage of our free introduction service to connect with a seasoned Australian property expert at Ambyy Buyers Agency. Our hand-picked specialists have extensive experience assisting foreign buyers in finding their ideal properties in Australia.
Upon request, you’ll receive a complimentary initial consultation lasting between 30 to 45 minutes. This session will provide an opportunity for you to ask general questions and gain insight into the services.
After your initial consultation, should you decide to proceed with our partner’s services, we’ll furnish you with a no-obligation proposal outlining all costs and fees associated with the assistance.
