Unlocking the Aussie Dream: Can Foreigners Buy Property in Australia?
Plenty of people have been able to change their lives through property investing.
Whether it’s early retirement, being able to leave your 9-5, or just have a little more cash on the side, plenty of Australians have seen the benefits of investing.
But what about those without Australian citizenship?
What opportunities are available for foreigners looking to make money property investing?
We are going to explore the legal and practical aspects of owning property in Australia as a foreigner and find out how difficult it really is.
This blog breaks down some of the processes involved, as well as regulations and requirements specific to international investors.
So, can foreigners buy property in Australia?
Yes, it’s certainly possible for people from other countries to buy property in Australia.
But there are some restrictions that international investors will need to comply with when looking at investment property.
Let’s look at the steps involved for foreigners when it comes to investing in Australia:
1. FIRB Application
The first step as a prospective international investor is putting in an application to the Foreign Investment Review Board, or FIRB.
They will assess a non-Australian citizen’s application and determine whether they are approved for an investment property.
If you buy a property without FIRB approval, there will be serious consequences.
You could be liable to fines, and even prison time depending on the breach.
So, make sure you follow the proper process when it comes to investing as a non-citizen.
New Zealand citizens don’t have to worry about FIRB approval, and largely follow the same rules and processes as Australian citizens.
Those who are looking to buy property with an Australian citizen (as joint tenants) also don’t have to worry about FIRB approval.
2. Only look to buy new property or vacant land to build on
An approval to invest will generally only be for a new property or vacant land that can be built on.
A foreigner will not be able to buy an established dwelling in the same way that Australian citizens are able to.
If a non-Australian citizen does wish to purchase an established dwelling, it must be for the purpose of residing in. It can then only be sold once the investor does not wish to live there anymore.
3. Save a larger deposit
While most banks will require around 20% of the property price for a home loan deposit, often foreign investors will be looking at around 30%
Higher interest rates may also be applicable to international investors, so make sure this is factored into budgeting as well.
4. Pay the Appropriate Fees
A non-Australian citizen investor will need to pay the FIRB application fee. This will depend on the value of the property you plan on buying.
A foreigner will also have to pay the Foreign Citizen Stamp Duty on top of any usual house buying fees that apply to Australian citizens.
This is dependent on the State or Territory that the property is purchased in, generally ranging from around 7-8%.
A Foreign Citizen Stamp Duty will have to be paid on top of a usual stamp duty that all Australian citizens are required to pay.
5. Follow the usual steps to buying a property in Australia
Apart from the extra fees and limitations already mentioned, the remaining steps on how to buy land in Australia largely follow those that apply to all citizens.
For a full breakdown of how to start investing in Australia and some of the critical steps involved, check out the video here.
Tax Requirements for Foreign Investors
An Australian Tax return must be lodged by declaring any income that may be received on an investment property in Australia.
Keep in mind that any maintenance of the property can be claimed as a tax deduction, similar to all Australian investors.
Capital gains tax may also have to be paid when you sell the property.
Paying Annual Vacancy Charge
Depending on the state where the property is purchased, a non-Australian citizen who buys a residential property will have to pay an annual vacancy charge if they do not live in it or rent it out for at least six months of the year.
The Australian Taxation Office will determine how much this charge will cost when the owner lodges the annual vacancy fee returns.
A non-Australian resident can certainly buy property in Australia for investment purposes.
But there are a few extra rules and regulations to follow that can often be a bit of an obstacle for potential investors.
And remember, it’s really important to follow all the steps and not try to cut any corners. There can be some serious consequences if Australian laws and procedures aren’t followed!
But there is plenty of money to be made in the Australia property market!
So many people, both citizens and non-citizens alike, have secured their financial freedom by buying property in Australia.
Through self-education, understanding the country’s laws and procedures, and using all the resources at your disposal, property investing is a very real and achievable goal.