Can Foreigners Buy Property in Melbourne?

A Guide for Foreign Investors

Investing in Australian real estate is an attractive opportunity for many foreign investors. With a strong property market, economic stability, and high rental demand, Melbourne especially offers excellent potential for international buyers. However, there are specific rules, approvals, and fees that non-residents must navigate before purchasing property. In this guide, we break down everything you need to know about buying real estate in Australia as a foreign investor.

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Can Foreigners Buy Property in Australia?

Yes, foreigners can buy property in Australia, but there are restrictions on the types of properties they can purchase. The Australian Government encourages foreign investment in new developments rather than existing properties to support housing supply. As a result, non-residents are typically limited to purchasing:

• Newly built properties
• Vacant land for development
• Established properties only if redeveloped to increase housing stock

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Foreign Investment Review Board (FIRB) Approval

Foreign investors must obtain approval from the Foreign Investment Review Board (FIRB) before purchasing property. The FIRB is responsible for regulating foreign investments and ensuring they benefit the Australian housing market.

Key Points About FIRB Approval:

• Required for all non-residents unless purchasing with an Australian citizen, permanent resident, or New Zealand citizen.
• Application fees apply and vary based on the property’s value, starting at $4,300 for properties under $75,000 and increasing to $1,171,600 for properties over $40 million.
• The approval process can take up to 30 days.
• Severe penalties apply for non-compliance, including fines up to AUD $157,500 and potential imprisonment.

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What Properties Can Foreign Investors Buy?

New Dwellings

A new dwelling is defined as a home that:

• Has not been previously sold or occupied
• Has been purchased directly from a developer
• Is part of a larger new development

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Vacant Land

Non-residents can buy vacant land, but they must begin construction within four years and provide proof of completion within 30 days of finishing the build.

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Established Properties (Redevelopment Only)

Foreign investors may only purchase established properties if they intend to redevelop the site, increasing housing stock. For example:

• A single dwelling must be demolished and replaced with two or more dwellings
• The existing property must remain vacant during redevelopment
• Redevelopment must be completed within four years

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Additional Costs & Taxes for Foreign Buyers

Annual Vacancy Charge

Foreign buyers who do not occupy or rent out their property for at least six months per year must pay an annual vacancy charge, determined by the Australian Taxation Office (ATO)

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Foreign Buyer Stamp Duty

In addition to standard purchase costs, foreign buyers must pay an additional stamp duty surcharge, which varies by state. For example:

• New South Wales (NSW): 8% surcharge
• Victoria (VIC): 8% surcharge
• Queensland (QLD): 7% surcharge

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Capital Gains Tax (CGT) & Income Tax

• Rental income from an Australian property must be declared in an Australian tax return
• Non-residents may be subject to capital gains tax (CGT) when selling the property if its value has increased

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Financing

Foreign buyers need non-resident home loan approval, as lenders assess foreign income differently. Key considerations include:

• Lenders may only accept 50-100% of foreign income, depending on currency and stability
• Most lenders require at least a 30% deposit from foreign buyers
• Interest rates for foreign investors may be higher than standard rates
• All income documents must be translated into English by a certified translator

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Need Assistance?

We can connect you with trusted Australian property specialists for a free consultation. Our network of experts can provide tailored advice on financing, FIRB applications, and investment strategies to help you successfully purchase property in Australia.

Get in touch today to start your Australian property investment journey!