How foreigners can buy investment properties in Australia
Foreign buyers can purchase Australian property as investors. But there are strict rules.
Key takeaways
- Buying an investment property in Australia as a foreign buyer comes with extra rules and regulations that you'll need to follow.
- The Foreign Investment Review Board (FIRB) oversees foreign property purchases and has its own application process.
- Most foreign buyers are limited to buying investment properties that are newly built.
Can foreigners buy property in Australia?
Yes. Non-Australians can buy property in Australia as investments. In Australia, foreign property purchases are regulated by FIRB (meaning foreign buyers must apply for approval through the FIRB before buying residential real estate) and there are limitations in place.
According to the FIRB website:
The Australian Government's policy is to channel foreign investment into new dwellings. The overarching principle is that a proposed investment should increase Australia's housing stock. Investment into new dwellings creates extra jobs in the construction industry, helps support economic growth, and increases government revenues.
In other words, Australia's foreign property investment rules encourage foreign buyers to purchase new buildings and therefore stimulate the construction of new housing.
Purchasing new dwellings
Foreign investors can get approval to buy new buildings or vacant land (provided you construct a property on the land) for investment purposes.
Foreign investors are currently unable to invest in established dwellings (existing homes) unless you're planning significant redevelopment.
How does the FIRB application process work?
Before you apply for approval to purchase an investment property, it's recommended that you obtain expert legal advice to make sure you understand and comply with all the necessary legal requirements. Then you can follow the steps below to apply for foreign investment approval:
- Check the FIRB website to read the guidance and check if you need FIRB approval.
- Visit the ATO website and click on "Start your application".
- Fill out the application form with your contact details, passport, visa documents and any previous FIRB application reference numbers.
- Provide the address and title details of the property you wish to purchase.
- Read and sign the declaration.
- Submit the application and pay the relevant fee.
- A decision on your application is usually made within 30 days and you will be informed of that decision within 10 days.
You must obtain approval from the FIRB before you can apply for a home loan with an Australian lender. Fees are payable at the time of lodging your application.
Penalties for breaking rules on foreign investment
There are serious potential penalties for breaching Australia's rules on foreign investment. Acquiring property without FIRB approval can involve hefty fines or time in prison.
There are higher penalties for foreign companies breaching these rules.
Home loan restrictions
If you need a home loan to cover your purchasing costs it's important to compare loans and lenders carefully. Many Australian lenders impose tighter lending criteria on foreign buyers. This can include:
- A lower loan-to-value ratio (LVR). LVR refers to your deposit size relative to the price of the property. You may need a larger deposit (around 30-40%) to qualify for a mortgage.
- A higher interest rate. A lender may only offer a loan for your investment with a higher interest rate than the lowest rates on the market.
- Restrictions on foreign income. Some lenders won't accept loan applications from temporary residents unless they earn an income in Australia.
If you want to get a home loan for your foreign investment you should approach lenders and ask directly about borrowing as a foreign investor. You could also focus on international banks that operate in Australia, such as HSBC.
Speaking to a local mortgage broker is also a good idea.
Tax implications
Finally, it’s also worth remembering that there are tax implications for investing in Australian property. Any rental income you receive from your investment will need to be declared on an Australian tax return. You will need to pay Capital Gains Tax on any profit you make when selling the property.
Sources
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is it possible to buy a property for overseas student exchange education in australia as a non resident .
Hi Judith,
Yes, non-residents can buy property in Australia but you’ll first need to apply for approval through the Foreign Investment Review Board (FIRB).
There may be restrictions on the type of property you can purchase. For example, you might have to buy a newly-built home.
Please refer above for the details on how to start the process. You can also reach out to FIRB for more information.
Thanks!
Richard
Hi, I am Nz citizen living in Australia and my wife is Nz permanent resident living with me Aus on 461(nz partner visa), can I still buy the property with no extra stamp duty?
Hi Andy,
If you are a New Zealand citizen holding a Special Category Visa (subclass 444), you are exempt from needing approval from the Foreign Investment Review Board (FIRB) if you want to purchase a property in Australia. But permanent New Zealand residents will need to apply for FIRB.
Unfortunately, the stamp duty surcharge or Foreign Purchase Additional Duty (FPAD) will still be applied if you want to buy property in Australia. Stamp duty varies according to state.
You may be exempt from having to pay the stamp duty surcharge if you are on a Special Category Visa (subclass 444). Again, this depends where you live. In New South Wales, you need to be in the country for at least 200 days and be in the country at the time of contract settlement and signing in order to be eligible for this exemption.
I would suggest you contact your state’s revenue office so you can discuss your situation in detail and determine which rules apply to you.
I hope this helps!
Cheers,
Sarah
Hi,
If I purchase a property in Aus and pay for it in full can I then rent it out?
Hi Treena,
Thanks for your comment and I hope you are doing well. Yes, you can rent out your property in Australia. Note that any rental income you receive from your investment will need to be declared on an Australian tax return, while you’ll need to pay Capital Gains Tax on any profit you make when selling the property.
Hope this helps and feel free to reach out to us again for further assistance.
Best,
Nikki
Hi, my nephew is an international student who is currently studying at University. Is he eligible for buying a property in Australia and is it possible that property can be under his parents’ name?
Hi T. Tran,
Thanks for your message. Yes, it is possible for your nephew to buy a property in Australia and make it under his parent’s name. Also, it’s easier if it’s a home to live in. If it’s an investment property then you have to get approval from the Foreign Investment Review Board (FIRB). Please see above the conditions for FIRB.
Hope this helps!
Best,
Nikki
My partner and I are looking to purchase our first property in NSW. Her father, who is Japanese, has offered to purchase a property on our behalf – jointly with my partner. The property would be around 550k My partner is now an AUS perm resident and I am a citizen. If he does purchase the property jointly with his daughter who is an aus perm resident does he have to get FIRB approval and pay stamp duty including the surchage?
Hi Kenneth,
Thanks for your inquiry.
It’s great to know that you are looking to purchase a property! As stated on the FIRB website on Residential Real Estate, foreign persons purchasing property as joint tenants with their Australian citizen spouse, New Zealand citizen spouse, or Australian permanent resident spouse doesn’t need FIRB approval. This exemption does not include purchasing property as tenants in common.
As for parents, looks like in doesn’t count in this situation. We suggest seeking advise from the FIRB directly to obtain information on this.
Hope this clarifies!
Best,
Nikki
Hi Kenneth,
Thanks for your inquiry.
It’s great to know that you are looking to purchase a property! As stated on the FIRB website on Residential Real Estate, foreign persons purchasing property as joint tenants with their Australian citizen spouse, New Zealand citizen spouse, or Australian permanent resident spouse doesn’t need FIRB approval. This exemption does not include purchasing property as tenants in common.
As for parents, looks like in doesn’t count in this situation. We suggest seeking advise from the FIRB directly to obtain information on this.
Hope this clarifies!
Best,
Nikki