Are you a foreign investor or temporary resident wishing to purchase residential property in Australia?
If that is you, before making offers on properties, you need to determine not only whether you can purchase residential property in Australia but also what costs are involved.
Foreign purchasers are generally prohibited from purchasing established dwellings, with exceptions.
A temporary resident* can apply to purchase an established dwelling to use as their principal place of residence, whilst living in Australia.
For foreign investors, it is the Australian Government’s policy to channel foreign investment into the purchase of new dwellings or vacant land. Approval for vacant land acquisition for residential development is generally conditional upon construction being completed within certain time periods. The overarching principal is that foreign investment should increase Australia’s housing stock, create jobs and support economic growth.
Prior to purchasing if you are not an Australian citizen or permanent resident, you need to seek the approval of the Foreign Investment Review Board (“FIRB”). To lodge an application seeking approval, applications are to be lodged through the Australian Taxation Office (“ATO”).
Depending on your circumstances, you can seek approval to purchase a specific property or an Exemption Certificate. An Exemption Certificate can be a more cost effective and streamlined approach where you seek approval to purchase properties within the conditions set out in your approval, such as time and price limitations. Compared to seeking approval for the purchase of a specific property, where if your offer is not accepted or negotiations fall through this will require you to pay further fees and seek further approval.
At the date of this post, an application to FIRB for approval to purchase a property or an Exemption Certificate for properties valued at $1 Million or less, costs $13,200.00. Fee tiers increase every $1 Million of purchase price.
You will need to seek the approval of FIRB whether you are acquiring a legal or equitable interest in property in Australia, such as property acquired by a trust with foreign beneficiaries and the registering of a security interest in a property as examples.
Once approval has been obtained from FIRB you then need to consider the treatment of foreign purchasers with Revenue NSW.
Purchasers whom Revenue NSW deem foreign will be liable for Transfer Duty and Foreign Surcharge on Transfer Duty, there may also be future land tax obligations once purchased and foreign surcharge on land tax.
In summary, before making offers on property in New South Wales it is not only important that you have permission to do so but also consider the extra costs and budget accordingly.
We’re here to help if you require assistance in navigating the system as a foreign purchaser or temporary resident seeking to purchase residential property in Australia.
* Whether someone is considered a temporary resident will depend on the types of Visas a person is on. Whilst we cannot give advice in relation to Visa’s and Immigration Law we may be in a position to determine if your Visa type renders you a temporary resident.