Legal & Tax
Foreign ownership of real estate
As a general rule, foreign non-resident buyers need to apply for and receive approval from the foreign investment review board (FIRB) before purchasing any residential property in Australia.
Foreign non-residents will normally be allowed to purchase new dwellings (rather than established dwellings) in Australia without being subject to any FIRB 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.
Foreign non-resident buyers can also purchase vacant land, provided that they can complete the development of a residential dwelling on the land within four years from FIRB approval.
Foreign non-resident buyer will normally be allowed to purchase an established dwelling for redevelopment provided the redevelopment genuinely increases the housing stock. FIRB approval is usually subject to specific redevelopment conditions.
An application fee is payable to FIRB to purchase a residential property.
See link to FIRB guidance note 29 for residential land fees: https://firb.gov.au/guidance-resources/guidance-notes/gn29
Penalties may apply for any purchase of residential property that breaches foreign investment rules.
Western Australian Land Information Authority known as Landgate (a Government agency) maintains a public record for each title to land in Western Australia. Landgate records the owners of land on a public registry.
Each parcel of land has a separate certificate of title. A certificate of title is an official land ownership record. Prior to making any purchase of a property it is recommended that a buyer undertakes a due diligence on the property.
Foreign non-residents can seek funding from Australian lending institutions. However, lending criteria for overseas borrowers is typically stricter than for Australian residents.
It is important that you seek taxation advice on how to structure your purchase and who will be the purchaser. Once you have entered into a contract to buyer a property you generally cannot change the buyer without being subject to double duty.
If you are a foreign non-resident for Australian tax purposes you will need to declare any rental income for any residential property and capital gains on Australian assets (including your residential home).
Duty is paid on the purchase of residential land in Western Australia. Generally the buyer is liable for the duty. The duty rates are as follows:
|Dutiable value||Residential rate of duty|
|$0 - $120,000||$1.90 per $100 or part thereof|
|$120,001 - $150,000||$2,280 + $2.85 per $100 or part thereof above $120,000|
|$150,001 - $360,000||$3,135 + $3.80 per $100 or part thereof above $150,000|
|$360,001 - $725,000||$11,115 + $4.75 per $100 or part thereof above $360,000|
|$725,001 +||$28,453 + $5.15 per $100 or part thereof above $725,000|
In addition to the above duty rates, foreign buyer’s duty imposes an additional duty of 7% on the dutiable value for certain acquisitions involving foreign persons or entities acquiring residential property in Western Australia.
You buy a property in Western Australia by the process of conveyance of the property. The settlement process now involves electronic conveyancing also known as PEXA.
The settlement process will involve (amongst other things) the buyer becoming the registered proprietor of the property and the buyer’s name being recorded on the certificate of title to the property. In order to purchase a property a buyer will need to engage the services of a person or firm who is registered for PEXA settlements.
Disclaimer: Please note that this information is for general purposes and is not intended to be advice. You should always obtain specific independent advice which is relevant to your circumstances.