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property buying process in Australia is relatively straightforward
and foreign investors are permitted to own real estate in
Australia as long as the land or property for sale has been
approved for sale to overseas buyers by the Foreign Investment
Review Board.
Income and capital gains derived from property
owned in Australia has to be reported to the Australian taxation
authorities but there are certain incentives in place for
overseas property investors to reduce or negate their taxation
liability.
In general the first stage of the property
buying process in Australia is to source suitable real estate
or land for sale that suits the particular requirements of
the investor.
It is essential to ensure that any particular
property the investor is interested in has Foreign Investment
Review Board approval as previously stated, and then it is
possible to make a move on that real estate either by making
a formal offer to purchase or attending an auction and bidding.
Especially in certain parts of Australia it
makes sense to have a full survey done on any resale properties
that you are interested in because buildings can be particularly
susceptible to problems with damp, termite infestation as
well as a number of other unpleasant issues.
The Housing Industry Association or Archicentre
both offer a survey review service for a fee and there are
also many private firms offering the service as well on a
region by region basis.
If you’re applying locally for finance
to purchase property in Australia many lenders require a survey
to be carried out to their satisfaction before they will actually
lend the money. However before getting to this stage a buyer
who requires finance to purchase property should speak to
either a domestic or international lender to determine exactly
how much finance can be borrowed.
There is no point in finding ideal investment
properties in Australia if you cannot afford to buy them!
With provisional finance terms agreed it is
possible to make an offer to purchase a property or bid for
it at auction. If an investor takes the latter route they
should have up to 10% of the purchase price readily available
on the day of the auction for the securing deposit should
their bid be successful.
Those who choose to use the services of a
real estate agent in Australia to find suitable investment
properties should make sure the agent is a member of the Real
Estate Institute of Australia. The REIA is the national professional
association for the real estate industry and about 80% of
all estate agents in Australia are members of the organization
and are bound by their practice guidelines.
An Australian real estate agent will take
down your property or land requirements and then contact you
when anything suitable comes to the market.
If you are in Australia you can visit the
properties, alternatively you can employ independent representation
to view, review and survey investment properties for you.
Once you have found a suitable investment property you can
put in an offer for it whether it is going to auction or not
as sometimes a buyer can purchase pre-auction if the price
offered is right.
Making an offer is not legally binding and
your offer may not be accepted. If you wish to secure a particular
property you may have to negotiate with the vendor. Once an
offer has been made and accepted the conveyancing process
begins and usually investors choose to employ independent
legal representation on the ground in Australia to handle
all the paperwork associated with the property buying process
in Australia.
The final step in the entire process is signing
the contract to purchase, the contract should include all
conditions of the sale and this contract is legally binding
so an overseas investor should not sign anything that they
are not 100% comfortable with and if English is not their
first language it is sensible to have the contract translated
into the investor’s mother tongue for review and consideration
before they are asked to sign the purchase contract.
In addition to the circa 10% deposit that
is required to secure purchase there are additional fees and
costs an overseas property buyer will have to pay when purchasing
investment property in Australia and these vary from state
to state but generally include legal fees, stamp duty on both
the transfer of the land or property and on any mortgage too,
mortgage application fees, insurances and what are known as
‘adjustments’ which include rates, council taxes,
water fees etc.
And finally, as previously stated there are
ways that an overseas or offshore property investor can legitimately
save tax on property purchase in Australia - from capital
gains tax to stamp duty - and it is wise to seek the guidance
and advice of a property taxation expert.
Such an expert will be able to advise you
on which expenses are tax deductible and how depreciation,
building write-off and borrowing expenses can all be used
to reduce an investor’s property related Australian
taxation liability.
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