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Yes, they can purchase a property in Australia. However, certain rules must be followed, as described below.
Foreign residents (do not reside in Australia)
You are only eligible to purchase new dwellings or vacant land in Australia. New dwelling refers to properties that have not been previously sold or occupied for more than 12 months. This limitation is in place to help boost the Australian construction sector.
Temporary residents (reside in Australia under temporary visa)
Temporary residents can purchase not only new dwellings or vacant land but also established dwellings for personal use, on the condition that they sell the property upon leaving the country. However, if the temporary resident's status changes to a citizen or permanent resident, they are not required to sell the property.
If you're classified as a foreign resident, you may also be subject to surcharge purchaser duty, a foreign investment fee, and vacancy fee. You will NOT be considered a foreign resident if you hold a permanent residence or partner visa (subclass 309 or 820).
Surcharge purchaser duty is currently calculated at 8% of the dutiable value (the greater of the purchase price or value of the property) and is paid in addition to transfer duty.
You will be exempted from the surcharge purchaser duty if
-you are an ordinarily resident in Australia (PR & Partner visa)
-you are a holder of a retirement visa (subclass 405 or 410)
-a citizen of a nation identified as not subject to surcharge purchaser duty due to international tax treaties.
Foreign residents must first apply for foreign investment approval or an exemption certificate with FIRB (Foreign Investment Review Board) to purchase all types of Australian residential land.
Additionally, you will need approval from either the ATO for residential assets or Treasury Foreign Investment for all other investments. You must pay a fee when submitting an application for foreign investment approval.
For new residential property or vacant residential land applications, the fee payable is generally based on the value of the property you are seeking to purchase, as follows:
After you invest, you need to register your residential land (asset) on the Register of Foreign Ownership of Australian Assets (the Register) using Online services for foreign investors. The registration of an asset is free.
A vacancy fee is intended as a financial incentive for foreign owners to make their residential dwellings in Australia available for rent.
You may need to pay a vacancy fee if your residential dwelling is not:
Foreign owners of residential dwellings in Australia are required to lodge a yearly vacancy fee return (return) within 30 days of the end of each vacancy year. A fee may also apply if the return is not lodged by the due date.
CTK Accounting is a full-scope accounting firm based in Wollongong, servicing clients nationally.
For advice on Tax, BAS, GST, Bookkeeping, and Payroll issues visit us at ctkaccounting.com.au
