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 in any profit.
Follow the links below to find out more about:
This information is for foreign residents. If you're not sure whether you're a foreign or Australian resident, you should:
Foreign Investment Review Board approval
If you are a foreign resident you cannot buy an established residential dwelling in Australia, either directly in your name or through a trust relationship or company structure. Penalties apply for breaching this rule.
You can buy other types of Australian residential property, such as new dwellings, vacant land and property that is to be redeveloped, but you must first get approval from the Foreign Investment Review Board.
If you are a temporary resident you can buy an established dwelling if you use it as your residence in Australia and get approval from the Foreign Investment Review Board.
Residential real estate applications
To apply to purchase residential real estate you will need to complete the application form on the Foreign Investment Review Board websiteExternal Link. However, the ATO will assess your residential real estate applications.
Residential real estate includes:
- vacant land
- an existing house
- a new house.
To apply you will need to pay a fee. The fees apply for each application and the amount is determined by the value of the property.
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 will generally not 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.
Fee waivers will not be considered before an application has been submitted.
If you wish to apply for a fee waiver, email FIRBResidential@ato.gov.au with ‘fee waiver request’ in the subject line and the following details:
- foreign investment application number
- reason for application
- details of request.
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.
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.
The ATO undertakes 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 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 goods and services tax (GST) and entitled to claim GST credits for related purchases.
Most residential accommodation is exempt from GST.
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.