Steps to consider in buying Australian residential property
Before you buy a residential property in Australia check that you understand the steps you need to take to comply with Australian foreign investment law.
Significant penalties apply for breaches of Australian foreign investment laws. See how the Australian government ensures compliance by foreign persons.
The steps below will help you. However, we recommend that you seek independent legal advice before you enter any contract to buy.
Step 1: Check if the foreign investment rules apply to you
The legal definition of a foreign person is complex. If you are not sure whether the foreign investment rules apply to you, check Are you a foreign person buying property in Australia?
Generally, a foreign person is someone who intends to buy property in Australia and is not:
- an Australian citizen
- a permanent resident of Australia
- a New Zealand citizen with a special category visa.
Corporations that are at least 20% foreign owned are also included in the definition of a foreign person. A similar rule applies to partnerships and trusts.
An Australian citizen or permanent resident who is not ordinarily a resident in Australia may be a foreign person in some circumstances.
Step 2: Check the types of residential property you can buy
Generally, you can apply for approval to buy:
- a new dwelling, including an off-the-plan dwelling
- vacant land if you build a residential dwelling on the land within 4 years.
You can buy an established dwelling but you must meet certain conditions. Learn more about the Types of property you can buy as a foreign person.
If you intend to invest in something that is not residential property – for example, agricultural land, commercial land, or a business-related asset – see How a foreign investor registers non-residential assets.
Step 3: Apply for approval to buy residential property
You must apply for approval from us, the Australian Taxation Office before you buy a residential property.
It is against the Australian foreign investment law to buy a residential property without first applying for approval or obtaining an exemption certificate. See Our approach to foreign investment compliance.
You apply for approval using Online services for foreign investorsExternal Link. For more information, see Apply to buy residential property as a foreign person.
For more information about the application fee, see Residential fees for a foreign person.
If you are buying from a property developer
You may not need to apply for approval if you intend to buy a new dwelling from a property developer and the developer already has a new or near-new dwelling exemption certificate for the dwelling. Ask the property developer if they have an exemption certificate.
When you buy the property
Step 4: Register your new residential property
Once you become the owner of the property, you must register your property within 30 days of settlement using Log in to Online services for foreign investors.
For more details and instructions, see How to register or manage an asset for foreign investors.
While you own the property
Step 5: Lodge a tax return each year to declare rental income
If your property is rented, you must declare your rental income by lodging an Australian income tax return each year and pay any tax owing.
See Owning real property in Australia.
Step 6: Lodge a vacancy fee return each year
We encourage foreign owners to ensure that their residential dwelling is occupied. Keeping your property occupied means you might not need to pay a vacancy fee.
Every year you must lodge a vacancy fee return using Online services for foreign investors.
The return tells us if your dwelling was occupied or genuinely available for rent. You may have to pay a vacancy fee, if:
- your property was not occupied
- you do not lodge a vacancy fee return, even if your property was occupied for the required number of days.
For more information, see vacancy fee return for foreign owners.
Step 7: Update your details on the Register
You need to update your records in Online services for foreign investorsExternal Link if there are any changes to your situation, for example:
- if you become an Australian citizen
- permanent resident
- you no longer own the property.
See How a foreign person registers a residential property.
If you sell your property
Log in to Online services for foreign investorsExternal Link and change your asset record to tell us you no longer own the property.
Step 8: Lodge an Australian income tax return
To meet Australian tax lodgment and payment obligations, you must apply for an Australian tax file number (TFN) and lodge an Australian tax return.
When you lodge your Australian income tax return, you need to:
- report any capital gain (profit) you made from selling the property
- claim a credit for the withheld amount.