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
More resources on Finder
Ask a question
49 Responses
More guides on Finder
-
Why are infrastructure developments important for property investors?
Major infrastructure upgrades are frequently associated with strong demand in local markets, as property investors often seek locations with infrastructure developments in the pipeline.
-
How to get FIRB approval when purchasing property in Australia
The FIRB has recently introduced new laws surrounding foreign investment along with new application fees and compliance policies.
-
How to maximise your tax return as an investor
Australia has a unique love affair with property as an investment class. Not only is bricks and mortar seen as a safe investment, but Australia’s tax code means property investors can see enormous benefits at tax time. To make sure you’re getting the most out of your investment property, it’s important to understand the tax benefits available to investors.
-
How to invest in property using a line of credit or home equity loan
If you're looking to invest in property, a line of credit loan could be a great way to leverage the equity in your existing property for a deposit. A home equity loan is a loan in which you put your property up as security to borrow against the equity of your home.
-
Investment loans versus owner-occupier home loans
Learn about the key differences between investment and owner-occupier home loans and find the right type for your needs.
-
Buying an apartment checklist
A guide to buying a unit as a property investment, plus a helpful downloadable checklist.
-
What is the property clock and how does it work?
The property clock can help you determine the perfect time to buy and sell your investment, but how exactly does it work?
-
Buying an investment property in a trust
Buying property in a trust can offer tax benefits and excellent asset protection for investors. Here's how it works and some tips to bear in mind.
-
Housing bubbles explained
Is the market downturn evidence of a housing bubble about to pop? We look at property data and expert commentary on Australia's housing market.
I am an Indian citizen married to Australian citizen . I wish to buy a house in Australia either in my name or jointly ? Can I do that ? If yes what’s the procedure . Thanks
Hi Vikram!
Thanks for getting in touch!
A non-resident can invest in a property in Australia however it can only be new properties, not established ones.
The first step in buying new properties is to seek approval from the Foreign Investment Review Board (FIRB). Failure to do so will face fines of up to $135,000, three years’ imprisonment or both.
Please refer to the information above regarding the The FIRB application process.
Hope this clarifies!
Regards,
Nikki
Hello, I live in Australia now as Guardian VISA to take care my children, who study in Australia as international students. (because they are under 18 years old).
In 2015, I bought the block of land in South Australia and I built the house in 2016 and to live in this house.
Now I want to move another place close to the high school and university. So I want to buy another house. Could you advise me, please:
1. Could I buy old dwelling house?
2. I have to pay a fee of 5,000AUD for applying with FIRB, besides, have I pay for any further fee for foreign buyers?
Hi Hieu,
Thanks for your message and for visiting finder – the leading comparison website & general information service built to give you advice in your buying decision needs. How are you doing today?
Below are the answers to your questions:
1. . Could I buy old dwelling house?
Under the new laws, non-resident buyers can only purchase new properties, not established ones. Non-residents who purchase property in Australia without first seeking approval from the Foreign Investment Review Board (FIRB) also face fines of up to $135,000, three years’ imprisonment or both. Companies breaching these rules can be fined up to $675,000, while buyers’ agents and real estate agents who help foreign buyers violate these rules also face stiff penalties.
2. I have to pay a fee of 5,000AUD for applying with FIRB, besides, have I pay for any further fee for foreign buyers?
This fee is $5,000 for properties valued under $1 million, and $10,000 for properties over $1 million. It then increases by $10,000 for each additional million dollars in property value. Paying this fee does not guarantee that a buyer will be able to purchase the property.
Hope this helps! Feel free to message us anytime should you have further questions.
Best Regards,
Nikki
My husband is an Australian citizen that has been living overseas for the last 20 years. We are now looking at buying an investment apartment in Australia.
What are the cost linked to such a purchase and the taxes we will have to pay on the rental of the property?
What are the cost that can be deducted fiscally?
Hi Valerie,
Thank you for getting in touch with Finder.
Taxes and other fees when buying an investment property vary depending on location/state. Please refer to ATO’s guide about holiday homes to get more information about the capital gains tax implications on your property.
It’s recommended that you obtain expert legal advice to make sure you understand and comply with all the necessary legal requirements before you apply to purchase an investment property.
As a friendly reminder, while we do not represent any company we feature on our pages, we can offer you general advice.
I hope this helps.
Have a great day!
Cheers,
Jeni
I have a friend who lives the US and he is interested in investing in property in Australia. I am an Australian with few investment property in Victoria . Is it possible to have joint business in real estate with a foreigner?
Hi John,
Thank you for getting in touch with Finder.
Since you’ve mentioned having a joint business in real estate with your American friend, it is best to seek further information on this from the Foreign Investment Review Board. You may contact them on 1800 050 377 from Australia or +61 2 6216 1111 from overseas.
I hope this helps.
Please feel free to reach out to us if you have any other inquiries.
Thank you and have a wonderful day!
Cheers,
Jeni