Australian Property Market Overview
Australia's property market remains one of the most attractive investment destinations for foreign buyers, particularly those from India, Malaysia, Southeast Asia, and Greater China. Key markets—Melbourne, Sydney, Brisbane, and Perth—offer strong rental yields, capital growth potential, and a stable legal and political environment.
However, foreign property investment in Australia is subject to a distinctive regulatory framework that adds layers of complexity. Understanding these requirements is essential for a successful acquisition.
FIRB Requirements for Property
All foreign persons (including temporary residents) must obtain FIRB approval before purchasing residential property in Australia. Key rules include:
- New Dwellings: Foreign investors may purchase new dwellings without the requirement to sell on departure (if purchased off-the-plan from a developer with FIRB approval for their development)
- Established Dwellings: Generally prohibited for foreign investors, with limited exceptions for temporary residents (who must sell upon departure)
- Vacant Land: Permitted with the condition that construction commences within 24 months
- Commercial Property: Subject to screening thresholds that vary by the investor's country of origin
FIRB application fees for residential property purchases range from AUD $4,200 (for properties under $75,000) to AUD $103,400 (for properties valued between $5 million and $10 million).
Stamp Duty & Land Tax Surcharges
Beyond FIRB, foreign buyers face additional financial burdens in the form of surcharges:
Foreign Buyer Stamp Duty Surcharge
Most Australian states impose an additional stamp duty surcharge on foreign buyers, typically 7–8% of the purchase price on top of the standard stamp duty. In Victoria, the surcharge is currently 8%, meaning foreign buyers of a $1 million property would pay approximately $55,000 in standard stamp duty plus $80,000 in surcharge—a combined duty of approximately $135,000.
Absentee Owner Land Tax Surcharge
Ongoing land tax surcharges apply to foreign-owned properties. In Victoria, the absentee owner surcharge is currently 4% of the land value, significantly increasing the holding costs of investment properties.
Ownership Structures
The choice of ownership structure has significant implications for tax, asset protection, and succession planning:
- Individual Ownership: Simplest structure but offers limited asset protection and may trigger additional CGT complexity for non-residents
- Company Ownership: Offers liability protection but loses the 50% CGT discount and may trigger additional FIRB scrutiny
- Trust Structures: Discretionary or unit trusts offer flexibility but are treated as foreign trusts with additional compliance obligations
- SMSF: Available only to Australian residents and citizens for retirement-focused property investment
Property Due Diligence Checklist
Essential due diligence steps for foreign buyers include FIRB pre-approval, title search and encumbrance review, zoning and planning certificate review, building and pest inspections, body corporate/strata review for apartments, contamination assessment for commercial or industrial properties, and review of any existing leases.
Collins Quarters International's Property & Conveyancing team manages the entire property acquisition process for foreign buyers. Get in touch for expert guidance.
