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 type of property:

Established dwellings

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

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.

Further conditions may apply if you purchase an established dwelling for redevelopment purposes.

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

If you are seeking FIRB approval to purchase vacant land:

1. a residential dwelling must be built on the land;
2. construction must be completed within 4 years from the FIRB approval date and you must submit evidence of completion of construction; and
3. you may not sell, transfer or dispose of your interest in the land before construction is complete.

Exemption certificate

You can obtain an exemption from having to seek individual FIRB approval for each attempted purchase of property if you anticipate having to make multiple attempts to purchase one property. (e.g. bidding on properties at auctions).

An exemption certificate is valid for 12 months from the date of approval and specifies:

• a limit on the property value
• the state or territory of the property; and
• the types of property you may purchase.

You will have to submit a new FIRB application if you want any changes to the certificate.

Fees and timeframe

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

To avoid your contract for sale being rescinded due to refusal of FIRB approval, it is critical that a special condition is included that the contract is conditional on receipt of FIRB approval.

Stamp duty surcharge

A stamp duty surcharge applies to foreign investors and temporary residents who purchase residential property.

Selling a residential property as a foreign resident

If you are a foreign resident selling an Australian property, the purchaser of your property must withhold and pay the ATO on settlement 15% of the purchase price. This is referred to as foreign resident capital gains withholding (FRCGW) which may be claimed back when you lodge your Australian tax return.

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