Owning real property in Australia
If you receive rental income from an Australian property, you must declare the income in an Australian tax return.
If you sell an Australian property, you must report the sale in an Australian tax return and pay capital gains tax on any profit.
Find out about:
Foreign Investment Review Board approval
If you are a foreign person (including temporary resident or foreign non-resident) and you plan to invest in Australian residential real estate there are obligations you will need to meet under Australian law.
Before you start, you need to check the Foreign Investment Review Board (FIRB) guidance notes to see if you are affected by these laws.
Residential real estate applications
To apply to purchase residential real estate you need to submit a Residential real estate application and pay an application fee. The fees apply for each application and the amount is determined by the value of the property.
Residential real estate includes:
- new dwellings
- established dwellings to live in
- properties for redevelopment
- off the plan properties
- vacant residential land.
The Residential property investment: fact sheet for foreign owners provides information to guide you through the requirements of applying to purchase Australian residential real estate. The fact sheet is also available for download in Chinese – traditional and Chinese – simplified.
An exemption certificate allows a foreign person to purchase one unspecified property in a specified state or territory without having to apply for individual approval for each property you are interested in.
Apply for an exemption certificate using the Residential real estate application form.
Land and water register
As a condition of your FIRB approval you must enter your residential real estate purchase on the ATO Land and water register no later than 30 days after the date of settlement. There is no cost involved in registering.
Vacancy fee return
If your land has a residential dwelling on it, you must lodge an annual vacancy fee return within 30 days of the end of every 12 month period you own it.
There are limited circumstances where a fee waiver or remittance will be granted and each will be determined on a case-by-case basis. Fees generally won't be waived or remitted following an unsuccessful attempt to purchase property or if there has been a change of mind to invest in the targeted property.
If you wish to apply for a fee waiver, you will need to submit a fee waiver form and attach relevant documents to support your claim. Fee waivers will not be considered before an application has been submitted.
Getting a tax file number and lodging a tax return
If you are a foreign resident and acquire an interest in Australian real property:
- you should obtain an Australian tax file number (TFN) as soon as possible so you can meet your Australian tax obligations
- you must report any income from renting or selling the property in an Australian tax return, and pay any tax owing.
If you're a foreign owner of a residential dwelling you may be required to lodge an annual vacancy fee return to report on the residential use of your property.
Renting or leasing property
Any rental or lease payments for your Australian property must be declared as income in an Australian tax return, whether or not the payments are actually paid to you.
Disposing of Australian property
If you sell (or otherwise dispose of) an interest in taxable Australian property, you must report it in an Australian tax return and pay capital gains tax on any profit.
Taxable Australian property includes houses, apartments and commercial buildings.
Your interest in the property may be:
- a direct interest – that is, complete or partial ownership of the property
- an option or right – such as a contract to purchase property 'off the plan'
- an indirect interest – that is, ownership of at least 10% of an entity whose value is mainly attributable to Australian real property.
In the year you dispose of your interest in a property, you need to work out your net capital gain or capital loss and report it in an Australian tax return. If you have made a capital gain you will pay tax on the gain.
We undertake compliance action, including data matching with overseas and Australian financial institutions and property records, to identify foreign residents that have not declared income and paid their tax obligations.
An off-the-plan purchase occurs when you enter into a contract to purchase new residential taxable Australian property, before the construction is completed. At this stage you are purchasing a contractual right to have the premises built.
If you dispose of this contractual right before the construction is completed, you will have a capital gains tax obligation.
If you build new residential premises for sale, you will be liable for goods and services tax (GST) on the sale and entitled to claim GST credits for related purchases. GST does not apply to the sale of existing residential premises.
Commercial premises and GST
Commercial premises are things like shops, factories and offices.
If you buy, sell, lease or rent commercial premises, you may be liable to pay GST and entitled to claim GST credits for related purchases.
Most residential accommodation is exempt from GST.
If you are a foreign resident and acquire an interest in Australian real property you must report any income from renting or selling the property in an Australian tax return, and pay any tax owing.