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  • 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.

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    Foreign Investment Review Board approval

    If you are a foreign personExternal Link (including temporary residentExternal Link or foreign non-residentExternal Link) 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 residential property for redevelopment. To do this 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.

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    Residential real estate applications

    To apply to purchase residential real estate you will need to complete a Residential real estate application.

    Residential real estate includes:

    • new dwellings
    • established dwellings to live in
    • properties for redevelopment
    • off the plan properties
    • vacant residential land.

    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.

    Exemption certificate

    An exemption certificate allows you to purchase one unspecified property within a six-month period without having to apply for individual approval for each property you are interested in. Use the Residential real estate application form to apply for an exemption certificate.

    Foreign persons can use an exemption certificate to purchase a new dwelling or a single block of vacant land.

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    Fee waiver

    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.

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    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.

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    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.

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    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.

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    Off-the-plan properties

    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.

    Property developers

    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.

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    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.

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    Last modified: 25 Feb 2019QC 33223