If you are a foreign resident, there are three key factors you will need to consider before purchasing a property in Australia:
- Whether you are classified as a foreign resident; and
- Notifying and obtaining approval from the Foreign Investment Resident Review Board (‘FIRB’); and
- Paying a Foreign Resident Transfer Duty
Are you a foreign resident?
A foreign resident can include ‘a foreign natural person, a foreign corporation or a trustee of a foreign trust’. Additionally, any temporary resident is considered a foreign resident.
- Foreign Natural Person: if you are not a citizen or permanent resident of Australia, or a New Zealand citizen who is a holder of a special category visa Subclass 444.
- Foreign Corporation: a corporation incorporated outside of Australia, or incorporated in Australia but controlled by a foreign person or corporation or trust.
- Foreign Trust: a trust in which a foreign natural person, a foreign corporation or a foreign trust has a substantial interest
The State Revenue Commissioner outlines how to determine the controlling or substantial interest (directly or indirectly) held by a foreign corporation or trust.
What type of properties can you buy?
The properties that a temporary resident foreigner vs non-resident foreigner may purchase vary.
| Property Type | Temporary Resident Foreigner | Non-Resident Foreigner |
|---|---|---|
| Established | ||
| New | ||
| Vacant Land | ||
Notifying and Obtaining FIRB approval
If you are a foreign buyer and the contract of sale is executed, you will need to notify FIRB by submitting a FIRB Application to be approved for the purchase. This can be arranged with a solicitor or conveyancer.
Foreign Resident Additional Transfer Duty
On top of paying Stamp Duty, an Additional Transfer Duty applies to Foreign Residents.
In Victoria, the Foreigner Purchaser Additional Transfer Duty is currently an additional duty rate of 8% payable on top of the standard duty rate of 5.5% when purchasing residential property in Victoria. These rates will vary depending on the state they buy from.
How W Legal Group can help
Contract of sales often require foreign purchasers to have FIRB approval before signing. If you are uncertain whether you need FIRB Approval, contact us at W Legal Group and we would be happy to assist.
