Foreign ownership of property
A foreign buyer can be a natural person, a corporation, or a corporation acting as a trustee.
Foreign Investment Review Board
The Australian Government’s Foreign Investment Review Board (FIRB) decides whether a foreign buyer is eligible to acquire land in Australia.
In general, a foreign buyer of residential property (including vacant land) in Australia must obtain the FIRB’s approval of the purchase before entering into a contract of sale. There is an exception where a foreign buyer is purchasing a home with their Australian spouse as joint tenants.
The FIRB’s powers to enforce this requirement are extensive (e.g. the FIRB can order a sale to be reversed). The buyer may also have to pay damages to the vendor for breach of contract if a sale is found to be void because the buyer failed to obtain the FIRB’s approval.
For more information about the FIRB, see www.firb.gov.au.
Additional land transfer duty
If a buyer of property in Victoria is not one of the following:
- an Australian citizen;
- the holder of a permanent visa; or
- a New Zealand citizen holding a special category visa (sub-class 444) who is in Australia at the time of settlement,
then the SRO assesses the duty payable on the transfer and adds eight per cent of the land transfer duty on the purchase price of the property. This rate applies to contracts entered into on or after 1 July 2019.
If you are a foreign buyer, you may be entitled to an exemption from paying an additional duty if you purchase a principal place of residence jointly with your spouse or domestic partner who is an Australian citizen or permanent resident or a New Zealand citizen who holds a special category visa.
Foreign trusts and stamp duty
Where a discretionary trust deed does not exclude foreign beneficiaries, then the SRO automatically deems the trust to be a foreign trust. In these circumstances, the extra eight per cent land transfer duty applies. This can also apply to unit trusts where more than 50 per cent of the units are held by foreign entities (i.e foreign residents, foreign corporations and discretionary trusts that don’t exclude foreign beneficiaries).
Foreign corporations and stamp duty
A corporation is considered to be foreign if it is incorporated outside of Australia or more than 50 per cent of voting power/shares/potential voting power is held by a foreign entity. The extra eight per cent land transfer duty applies if a corporation is considered a foreign entity.