How to buy property in Australia as a foreigner

Investing into Australian real estate is a very attractive prospect for many foreigners, and although it is more than possible to do so, investing from overseas does not come without some extra challenges.

Below is a breakdown of the process of how to buy property in Australia without Australian citizenship, including some of the specific requirements, rules and limitations.

Can foreigners buy property in Australia?

Firstly, the key question is whether it's possible for non-Australian's to buy property in Australia: yes, it is possible. However, there are limitations on what properties foreigners and non-residents can buy in Australia.

What is needed for a Non-Australian Citizen to buy property in Australia?

Foreign investors require Foreign Investment Review Board (FIRB) approval in order to purchase any property in Australia. The FIRB is a government body that manages foreign investments and property purchases.

The FIRB has a set of rules that only allow foreigners to purchase certain types of property, specifically new dwellings. The foreign investors must apply to the FIRB for permission to buy land or property in Australia.

Non-residents and foreign investors are restricted to purchasing new dwellings and vacant land with the intention to build only.

FIRB approval requires an application fee, which will ultimately depend on the cost of the particular property. Generally, the application fee will be higher on more expensive properties or land.

The application process can take up to 30 days and can carry severe penalties for any non-residents who attempt to skip the FIRB approval process.

Foreigners will also need to acquire a non-resident home loan approval, as lenders tend to access foreign income differently. Lenders may only consider between 50-100% of your net earnings (to account for fluctuating stability).

For lenders to approve a non-resident home loan, evidence of your foreign income would need to be provided in English (or the use of a licensed interpreter to complete all necessary translations).

When does FIRB not apply to foreign investors?

While foreigners and temporary residents have to apply to the FIRB for approval before their Australian property purchase, there is an exception to this rule:

Foreigners buying property jointly with either an Australian citizen, a permanent Australian visa holder or a New Zealand citizen will not have to apply for FIRB approval before property purchase.

What is the Annual Vacancy charge?

A non-resident who buys an Australian residential property, but does not live in it or rent it out for at least six months of every year will be subject to an annual vacancy charge.

The amount of this charge will be determined by the Australian Taxation Office (ATO) and is usually done so when non-resident owners of Australian real estate lodge their annual vacancy fee returns.

Do I pay tax on my investment property in Australia?

You must declare the income that is received on any investment property in Australia, by lodging an Australian tax return, and the costs of maintenance of the property can be claimed as a tax deduction.

You may also have to pay capital gains tax (CGT) when you sell it, if the value of the property increases while you own it.

For more assistance with taxes in Australia relating to owning a property while living abroad, request a free introduction to a Australian tax specialist and we will connect you with one of our trusted partners who will also offer you an initial free consultation.

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What types of property can be purchased by a Foreign Investor?

‘New dwellings’ - which are usually classed as any newly built properties or vacant land with the intention of build are generally the only types of property foreign investors can purchase.

Once the FIRB approval date has been received, a home must be constructed on vacant land within the first four years. Upon build completion, confirmation proof should then be sent to FIRB within 30 days.

An exception to this rule does exist in that FIRB may grant permission to foreign investors to purchase existing/ established dwellings (as opposed to new), but only on the condition that they have plans to redevelop the dwelling, creating room for more potential residents. For example, creating a plan to demolish one home, with the action plan to build two in its place.

How much deposit is required for Foreign Investors?

Despite home buyers usually being required to provide a 20% home loan deposit on their purchase, many lenders frequently require a higher 30% from foreign investors. Having an expert mortgage broker’s guidance in this process can help you achieve your home loan approval from a specialist lender in a costly, time-efficient manner.

Lenders providing mortgages for foreign investors may also impose a higher interest rate than normal.

What are the fees for foreigners buying property?

As mentioned above, FIRB approval requires an application fee, which will ultimately depend on the cost of the particular property. Generally, the application fee will be higher on more expensive properties or land.

Properties valued less than $75,000 cost $2,000. However, properties over $9 million cost $114,300. Fees go up to a maximum of $503,000 for a residential property worth $40 million.

A Foreign Citizen Stamp Duty charge will also have to be paid on top of all the other standard home-purchasing fees (will apply as normal regardless of citizenship). This stamp duty can vary depending on the state which you are buying in and is worth checking during the process of property hunting. For example, the foreign citizen stamp duty currently stands at an 8% surcharge in New South Wales.

Request a free introduction to an Australian Property Specialist

Through our unique network, we will connect you with a trusted Australian property specialist who will conduct a free introductory consultation, ask you questions about your situation and provide advice on how to buy properties in Australia as a foreigner.

They will be able to assist with all aspects of buying a property in Australia and cover most states and cities across the country.

Once your consultation has been completed they will be able to present a proposal of their services and fees with no obligation to proceed, and enable you to decide the best course of action.

Request your free introduction to an Australian property specialist >