Updated: Jan 3
Australia is one of the few countries that welcome foreign property investors. According to a research by Australian Bank, ANZ, foreigners buy up to 25% of new properties in Australia.
As a foreign resident investing in Melbourne and Australia, the type of property you can buy is dependant on your residency status. By default, you are a non-permanent resident or a temporary resident, if you do not hold either a permanent Skilled Migrant or permanent Business Migrant visa.
Here's what a foreigner can buy in Melbourne.
Temporary residents will normally be allowed to purchase only one established dwelling to live in as their residence (home) in Australia. They are, however, subject to the conditions that they:
Use the property as their principal place of residence in Australia;
Do not rent any part of the property, included ensuring that the property is vacant at settlement; and
Sell the property within three months from when it ceases to be their principal place of residence.
Temporary residents are not permitted to purchase established dwellings as investment properties, or rent out, or as holiday homes.
Non-resident foreign investors are generally prohibited from purchasing established dwellings in Australia. Non-resident foreign investors can only buy new properties, off-the-plan apartments and vacant land. A non-resident foreigner buying any residential property in Australia, will first need to obtain approval from FIRB for each property.
Foreign controlled companies are generally prohibited from purchasing established dwellings, although foreign companies with a substantial Australian business may be permitted to acquire established dwellings for the purpose of providing housing for their Australian based staff.
A new dwelling is a dwelling that will be, is being, or has been built on residential land, has not been previously sold as a dwelling and has either:
Not been previously occupied; or
If the dwelling is part of a development, was sold by the developer of that development and has not previously been occupied for more than 12 months in total.
New dwellings do not include established residential real estate that has been refurbished or renovated.
A single dwelling that has been built to replace one or more demolished established dwellings would generally not be considered a new dwelling for the purposes of Australia’s foreign investment framework.
Foreign persons generally need to apply and receive foreign investment approval before purchasing vacant residential land for development.
Foreign persons will normally be allowed to purchase vacant land for residential dwelling development, subject to conditions that:
The development is completed within four years from the date of approval; and
Evidence of completion of the dwelling/s is submitted within 30 days of being received. This could include a final occupancy or builder’s completion certificate.
Vacant land that previously has an established dwelling on the land would generally not be considered as vacant land for the purposes of Australia’s foreign investment framework.
Foreign persons (temporary residents and foreign non-residents) generally need to apply and receive foreign investment approval before purchasing established residential dwellings for redevelopment.
Foreign persons will normally be allowed to purchase an established dwelling for redevelopment in Australia, provided the redevelopment genuinely increases the housing stock. An increase in Australia’s housing stock is generally taken to mean that at least one additional dwelling will be created.
Such proposals are normally approved subject to conditions that:
The existing dwelling(s) must remain vacant prior to demolition and redevelopment;
The existing dwelling(s) is demolished and construction of the new dwelling is completed within four years of the date of approval; and
Evidence of completed of the dwellings is submitted within 30 days of being received by the applicant. This could include a final occupancy or builder’s completion certification.
Foreign persons will generally not be given approval to purchase an established dwelling to redevelop into a single new dwelling.
FIRB Application Fees
You will also need to pay an application fee as per the table below:
$1,000,000 or less
$1,000,000 - $1,999,999
$2,000,000 - $2,999,999
$3,000,000 - $3,999,999
For each further $1,000,000 increase
There are tax implications for investing in Australian property. Any rental income received from the investment will need to be declared on an Australian tax return, and, you’ll need to pay Capital Gains Tax on any profit made when selling the property.
Melbourne Buyers Agents
If you are a non resident planning to invest in Melbourne properties, have a chat with us. Our Melbourne based Buyers Agent service helps property buyers understand the Melbourne property market, outsmart the other buyers and avoid the inflated pricing.