The rules surrounding the purchase of Australian real estate by anyone other than Australian citizens and Permanent Residents - are reasonably complex and have become more so since December 1, 2015 with the introduction of Foreign Investment Review Board (FIRB) application fees and a new compliance/penalty regime.
What is FIRB?
FIRB stands for Foreign Investment Review Board. It is the governing board responsible for reviewing applications from foreign purchasers looking to purchase property in Australia.
Can I purchase property if I am not an Australian resident?
Generally non-Australian residents are prohibited from purchasing existing dwellings, Australian temporary residents are only permitted to purchase an existing dwelling to live in, not to invest or rent out. Purchases of vacant land or new dwellings by foreign persons are permitted with the approval of the Foreign Investment Review Board.
What is the foreign resident withholding tax?
When a foreign resident sells Australian residential real estate they are subject to a withholding tax of 10%. In 2016 legislation was introduced to require all purchasers of property over $2M to withhold the amount of the tax and pay it to the ATO unless the vendor could prove that they are not a foreign resident (by providing a clearance certificate). From 1 July 2017 the withholding tax has increased to 12% and applies to all transactions over $750,000.
If you would like more information about selling or purchasing property in Australia and what processes are necessary for this to be successful give Rachael Thurn a call on (02) 6331 2911, We’re here to help.
Please note the answers provided are for your general information only and we ask that you call our office on (02) 6331 2911 to obtain detailed legal advice for your individual situation.