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  • Exemption certificates for foreign investors of residential real estate

    If you are a foreign person investing in Australian residential real estate, you may need foreign investment approval before purchasing a property.

    You can apply for an exemption certificate. This will allow you to bid or make offers on multiple properties within a specific state or territory – provided you only proceed with purchasing one property.

    If you obtain an exemption certificate, you will not need to seek individual approval for each property you want to purchase, avoiding the need for variations or new applications after each unsuccessful bid.

    You can apply for an exemption certificate even if you have already signed a contract, provided the contract is still conditional.

    Your exemption certificate will:

    • be valid for 12 months from the date of approval
    • specify a limit on the property value
    • specify the state or territory in which the property may be purchased
    • specify the types of property that may be purchased.

    Exemption certificates will normally be approved subject to the same standard conditions for a foreign person applying for approval for a specific property type. These include an established dwelling, new dwelling or vacant residential land title.

    Find out about:

    Eligibility

    Eligibility rules apply to the type of purchase for a:

    Temporary resident

    If you are a temporary residentExternal Link, you can apply for an exemption certificate to allow you to purchase one of the following:

    • an established dwelling to live in
    • a new dwelling, or
    • a single block of vacant land for development.

    Example 1

    Zhong is a temporary resident. She wants to purchase a dwelling in Hobart to live in while she is in Australia. She applies for an exemption certificate that will allow her to purchase one unspecified property (new, established or vacant land) for less than $2 million. She is granted the certificate which is valid for 12 months.

    Zhong attends multiple auctions and is unsuccessful. She then makes a private offer on an established dwelling for $1.5 million, and her offer is accepted. Zhong has used her exemption certificate to purchase an established dwelling. She is no longer able to use that certificate to buy any other property.

    End of example

    Example 2

    Jaymie is a temporary resident. He wants to purchase a dwelling in Queensland to live in while he is in Australia. He applies for a residential land exemption certificate that will allow him to purchase one unspecified residential property for $1 million or less. He is granted the exemption certificate which is valid for 12 months.

    After a number of failed offers on new and established dwellings over several months, Jaymie attends an auction where the bidding reaches $1 million. Jaymie continues to bid on the property, despite reaching the value limit on his certificate. The hammer comes down when he is the highest bidder at $1.1 million.

    The purchase price is higher than the amount specified in Jaymie's exemption certificate. This means the certificate is not valid for his property purchase. Jaymie does not have foreign investment approval to purchase a property over $1 million. He has now breached the law and is subject to penalties.

    End of example

    Foreign non-resident

    If you are a foreign non-resident you can apply for an exemption certificate to allow you to purchase one of the following:

    • a new dwelling
    • a single block of vacant land for development.

    Example 1

    Josef is a foreign person who wants to purchase a vacant residential land title up to the value of $2 million in Sydney. He wants to build a house on the land.

    Josef makes a private offer on a title of vacant residential land for $1.5 million, and his offer is accepted. The parties sign a conditional contract requiring them to obtain foreign investment approval prior to the contract becoming binding. They apply for a residential land (other than established dwelling) exemption certificate up to a value of $2 million. Josef is granted the certificate which is valid for 12 months for a single purchase of up to $2 million.

    After the application is approved, the contract becomes binding and Josef proceeds with the purchase of the vacant land.

    Josef has used his exemption certificate to purchase the block of vacant residential land. He is no longer able to use that certificate to acquire any other vacant residential land titles.

    If Josef's purchase was unsuccessful and the contract did not become binding, he could use the certificate to buy another block of land within 12 months from approval.

    End of example

    Example 2

    Suki is a foreign person who wants to purchase a new dwelling in Queensland to rent out. She applies for a residential land (other than established dwellings) exemption certificate to allow her to purchase one unspecified new dwelling for $1 million or less. She is granted the certificate which is valid for 12 months.

    Suki views a number of apartments for sale and finds two separate new dwellings that she wishes to purchase. Because they are being sold by different vendors and they are for $500,000 each, she decides to give each vendor a copy of her exemption certificate. She then proceeds with the purchase of both dwellings.

    The exemption certificate only allows Suki to purchase one new dwelling. Even though the combined total purchase price doesn’t exceed the total $1 million value allowed, she does not have approval to purchase the second dwelling. Suki has breached the law and is subject to penalties.

    End of example

    How to apply

    Applying for an exemption certificate is similar to applying for a specified property application.

    To apply for an exemption certificate:

    Take care to supply the correct details and all required information as part of your application. If you need to change the details listed after an approval has been granted, you may need to reapply and pay further fees. This could include, for example, changing the name on the approval.

    Conditions

    The exemption certificate will be approved subject to the following conditions:

    • The certificate will generally be valid for 12 months from the date of approval or until one property is purchased, whichever comes first.
    • You may purchase one dwelling or vacant land title (depending on your eligibility) without needing to seek individual approval for each property of interest.
    • The purchase price of the property is up to a specified value.
    • The property is in a specified state or territory within Australia.
    • You register your property purchase on the ATO Land and Water Register no later than 30 days after settlement. To register, complete the ATO Land and Water Registration Form.

    Your exemption certificate will be approved subject to the standard conditions that apply to a foreign person applying for approval for the purchase of a specific type of property.

    The property types may include:

    • a new dwelling
    • a vacant residential land title
    • a specific established dwelling to live in as a residence (home) in Australia. (Note: this type is not available to non-residents).

    On purchase of one of these property types you must comply with the conditions for:

    Established dwellings

    • The property is vacant at settlement.
    • You use the property as your principal place of residence in Australia.
    • If the property ceases to be your principal place of residence in Australia, then you must sell, transfer or otherwise dispose of your interest in the property within six months.
    • If you cease being a temporary resident within the meaning of the Foreign Acquisitions and Takeovers Act 1975, then you must sell, transfer or otherwise dispose of your interest in the property within six months.
    • You don’t rent out any part of the property.

    New dwellings

    • You do not purchase a dwelling where a single dwelling has been built to replace one or more demolished dwellings.

    Vacant land

    • You must complete the construction of all dwellings within four years of the date of the approval notice.
    • If the vacant land has previously had a dwelling on the land, you must construct more than one dwelling each of comparable size and value.
    • If the vacant land has never previously had a dwelling on the land, you must construct at least one dwelling.
    • You do not sell, transfer or otherwise dispose of your interest in the vacant land prior to completing construction of all dwellings.
    • You will need to notify us no later than 30 days after the day on which a certificate of fitness for occupancy or use is issued for each dwelling on the property. To notify us you will need to complete the FIRB Vacancy Fee form.

    Varying conditions

    Foreign persons may apply to vary the conditions of the exemption certificate. A fee will apply for this. To vary the conditions on an existing approval you can also use the Foreign Investment Review Board application form.

    Requests to change an application not yet determined by the ATO do not need a variation application form. If you need to change an undecided application, email us at FIRBresidential@ato.gov.au.

    See also:

    Foreign Investment Review Board Guidance Note 10: FeesExternal Link - refer to the Word or PDF download for information about fee variations.

    Fees

    We will consider an application for a residential land (other than established dwellings) exemption certificate once the relevant application fee has been paid. The application fee is based on the same tiered fee structure if seeking individual approval to purchase a specific established dwelling, new (or near new) dwelling or vacant land title.

    Fees will generally not be waived or remitted if you either:

    • purchase a property for a price less than the amount specified in the certificate
    • are unsuccessful in purchasing a property before the certificate expires.

    See also:

    Foreign Investment Review Board Guidance Note 10: FeesExternal Link - refer to the Word or PDF download for information about fees.

    Penalties

    Foreign persons who do not comply with the conditions on the certificate will have breached the foreign investment rules. You may be subject to strict penalties, including civil and criminal penalties and disposal orders.

    For example, you don't comply if you purchase:

    • a property above the specified value
    • more than one property
    • outside the 12-month approval period
    • a property in a state or territory not specified in the exemption certificate
    • a property and breach any of the specific conditions relevant to that type of property.

    Cases of non-compliance with Australia’s foreign investment framework may also be brought to the attention of law enforcement agencies and other Australian Government departments, such as the Department of Home Affairs.

    If you suspect you’ve breached your foreign investment conditions or wish to report a suspected breach of foreign investment rules, you can:

    If you would like more information on what is a breach, see

    After you invest

    You must register your residential real estate purchase with us using the Land and Water Registration form no later than 30 days after the date of settlement. There is no cost to register.

    Settlement generally means that you are able to:

    • occupy the property if there is a dwelling on it
    • commence building if you have purchased a piece of vacant land.

    You do not have to register if you have just signed a contract and have not yet taken possession of the property.

    If your property has a residential dwelling on it, within 30 days of the end of every 12-month period you own it you must either:

    See also:

    Where to get help

    To find out more about lodging your application you can phone us on either:

    • 1800 050 377 within Australia
    • +61 2 6216 1111 outside Australia.

    If you do not speak English well and want to talk to a tax officer, you can phone the Translating and Interpreting Service on:

    • 13 14 50 within Australia
    • +61 3 9268 8332 outside Australia.
    Last modified: 23 Apr 2021QC 64467