What is FIRB?

The Foreign Investment Review Board (FIRB) assesses applications from non-residents of Australia seeking to purchase residential property in Australia. The FIRB considers various criteria and stipulates pre-requisites for approval to be granted.

Who needs FIRB approval?

Foreign investors and temporary residents holding temporary visas need FIRB approval before buying a residential property.

If you are within one of the following categories, your purchase is exempt from FIRB approval:

1. You are an Australian or New Zealand citizen;
2. You are an Australian permanent resident who holds an Australian permanent visa;
3. You acquired the property by a Will or a Court Order;
4. You are purchasing property with a spouse (as joint tenants) who is an Australian permanent resident or an Australian or New Zealand citizen; or
5. You are purchasing a new dwelling from a developer who holds a new dwelling exemption certificate.

Property types

FIRB considerations are based on the types of property:

Established dwellings

An established dwelling is an existing home that has been occupied by people and is not a newly built home.

The following conditions apply if you are seeking FIRB approval to purchase an established dwelling:

1. You must not rent out the property or any part of it;
2. you use the property as your principal place of residence; and
3. the property must be vacant at settlement

If the property ceases to be your principal place of residence or you stop being a temporary resident, you must dispose of the property within 6 months

Further conditions may apply if you purchase an established dwelling for redevelopment purposes, for example: demolishing and rebuilding a dwelling.

New dwellings

A new residential dwelling is a dwelling that:

1. will be, is being, or has been, built on residential land;
2. has not been previously occupied or (if it was sold in a development) was not occupied for more than 12 months; and
3. Has not been previously sold as a dwelling.

An application to buy a new dwelling will typically be approved unless it has been constructed to replace a demolished dwelling.

Vacant land

Vacant land is land that has no substantive permanent building on it to be lawfully occupied by persons, goods or livestock.

The following conditions apply if you are seeking FIRB approval to purchase a vacant land:

1. A residential dwelling is built on the land;
2. construction is completed within 4 years from the FIRB approval date; and
3. you do not sell, transfer or dispose of your interest in the land before construction is complete;

You submit evidence of completion of construction within 30 days of receiving it (e.g. builder’s completion certificate or certificate of occupancy and use)

Exemption certificate

You can obtain an exemption certificate if you anticipate having to make multiple attempts to purchase one property. For example, the exemption certificate allows you to bid on properties at auctions without having to seek individual FIRB approval for each attempted purchase of property.

The exemption certificate will:

1. Be valid for 12 months from the date of approval
2. Specify a limit on the property value, the state or territory of the property and the types of property that you may purchase

If you require any changes to the exemption certificate, such as the property type or value, you will have to submit a new FIRB application.

Fees and timeframe

You can make an application for a FIRB approval or an exemption certificate online through the ATO website. The amount of the application fee will depend on the value of the property: the higher the value of the property, the higher the application fee. Refer to the ATO website for a schedule of fees.

The current turnaround time for an approval is about 30 to 90 days.

To avoid your contract for sale falling over due to approval being refused, it is critical that a special condition is included that the contract is conditional upon receipt of FIRB approval.

Stamp duty surcharge

A stamp duty surcharge applies to foreign investors and temporary residents who purchase residential property (8% in NSW).

Selling a residential property as a foreign resident

If you are a foreign resident selling an Australian property worth more than $750,000, the purchaser of your property must withhold and pay the ATO on settlement 12.5% of the purchase price. This is referred to as foreign resident capital gains withholding which may be claimed back when you lodge your Australian tax return.

Here to Help

Contact us for advice or assistance with an application to the Foreign Investment Review Board.