If you are a non-resident or a temporary visa holder, you are legally required to get permission from the Foreign Investment Review Board (FIRB) if you want to buy property in Australia. Australian Citizens, Australian permanent residence holders, and New Zealand citizens are exempt from requiring FIRB approval.
There are also limitations on the type of property you can buy. If you are a foreign resident you cannot buy an established residential dwelling in Australia, either directly in your name or through a trust relationship or company structure. Penalties apply for breaching this rule (including civil and criminal penalties and disposal orders). The Government’s policy is to channel foreign investment into new dwellings as this creates additional jobs in the construction industry and helps support economic growth.
You can, however, buy other types of residential property, such as new dwellings, vacant land, and property that is to be redeveloped, but you must first get approval from the FIRB. Foreign non-residents will normally be allowed to purchase new dwellings in Australia without being subject to any conditions. There is no limit on the number of new dwellings a foreign non-resident may purchase, but approval is generally required prior to each acquisition.
Developers may hold a new dwelling exemption certificate that allows them to sell new dwellings in the development to foreign persons. Where a developer has this certificate, the foreign resident may not require a separate approval.
The FIRB website provides a detailed guide to the regulations and approval processes for each category of real estate. It also gives information on fees, and an application for approval to purchase property can be made directly from this site.
In Australia, property transactions are normally done with the assistance of a lawyer, or through the services of a licensed conveyancer. If you are interested in a particular property, get a copy of the contract from the real estate agent or seller (if being sold privately), and have your attorney or conveyancer go through the contract prior to signing. Each Australian state has their own property laws and your conveyancer or attorney will carry out the required checks and advise you as to when it is suitable to sign the contract.
When you sign the contract, you are required to pay a deposit (normally 10% of the purchase price). A cooling-off period may then apply, during which time you can carry out building and pest inspections. (Note that properties sold at auction do not usually have a cooling-off period.) Once the cooling-off period expires, the contract is binding on both parties and the settlement period commences (this normally varies from four to six weeks). At the end of the settlement period, the buyer pays the balance of the purchase price and takes ownership of the property.
You should typically allow 5% of the purchase price for various expenses associated with the purchase of a property. The major expense is government stamp duty, and this varies depending on which state or territory the property is located in.
It is also important to note that if you receive rental income from an Australian property, you must declare the income in an Australian tax return. Similarly, if you sell an Australian property, you must report the sale in an Australian tax return and pay capital gains tax in any profit.