Australian Guide for Foreign Residential Property Buyers: 2025-26 Latest Policies and Fee Details
- David Wong
- Jul 18
- 4 min read
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Effective July 1, 2025, Australia has updated its policies and fees for foreign investment in residential real estate. If you're a non-resident planning to buy property in Australia, this guide offers comprehensive information to help you plan your investment effectively.
Clarifying Your "Foreign Person" Status
Australian law defines "foreign person" in a complex manner, encompassing not only individuals but also companies and trusts. Before you begin any property purchase, you'll need to confirm your status.
Generally, you may be considered a "foreign person" if you are not:
An Australian citizen
An Australian permanent resident
A New Zealand citizen holding a special category visa
Note: Even if you are a permanent resident, you may still be classified as a 'foreign person' if you do not ordinarily reside in Australia, or if a company or trust has 20% or more foreign ownership.
Before Buying: Understanding Property Types and Approvals
In Australia, you must apply for approval from the Australian Taxation Office (ATO) before signing any property purchase contract. Purchasing property without prior approval may result in serious penalties.
Property Types You Can Apply to Buy：
New or Near-New Dwellings: This includes off-the-plan properties, newly constructed homes that haven't been previously occupied, or those occupied for less than 12 months in total.
Vacant Land: This usually refers to land without substantial permanent structures, and you'll need to build at least one residential dwelling on it within four years of approval.
Established Dwellings for Redevelopment: If specific conditions are met, such as demolishing the existing residential structure and constructing at least 20 new dwellings to significantly increase Australia's housing supply, approval might be granted.
From April 1, 2025, to March 31, 2027, foreign persons are prohibited from purchasing established dwellings in Australia, unless specific exceptions apply (e.g., for temporary residents intending to use an established dwelling as their primary residence).
Applying for Approval and Exemption Certificates：
Standard Approval: If you plan to buy a specific property, you'll need to submit an application and obtain a "no objection notification."
Exemption Certificate: If you want to search for and purchase an eligible property within a particular state or territory, you can apply for an exemption certificate. This certificate is valid for 12 months and lets you make multiple offers or bids on properties within that state, up to a specified value limit, without needing separate applications each time.
Developer Exemption Certificate: If you're buying a new or near-new dwelling from a developer who already holds an exemption certificate, your property approval process will be greatly simplified, and you won't need to apply individually. However, if the purchase value exceeds AUD $3 million, foreign buyers still need to apply for their own foreign investment approval.
Explanation of Foreign Investment-Related Fees
Your investment application fees are typically based on the property's value and type, and they are updated annually on July 1.
Purchase Approval Application Fee: Fees are tied to the property's value, increasing with higher values. Application fees for new dwellings and vacant land are lower than for established dwellings of the same value. For example, a new dwelling valued at AUD $2 million or less has a fee of $30,300; for an established dwelling of the same value, the fee is significantly higher at $90,900. If co-ownership is involved, fees will be calculated proportionally to each owner's share as Tenants in Common.
Variation Approval Application Fee: Modifying an already approved application costs $4,500 for a simple change and $30,300 for a complex one. If the original application fee was lower, the variation fee won't exceed that original amount.
Annual Vacancy Fee: If your property is vacant for more than 183 days in a year, you'll incur a vacancy fee. This fee usually amounts to double your original foreign investment application fee.
Post-Purchase Obligations and Annual Reporting
Your obligations don't end once the property transaction is complete. As a property owner, you are also required to continue fulfilling the following obligations:
Register Property: You must register your property using "Online services for foreign investors" within 30 days of settlement.
Annual Tax Return: If your property generates rental income, you must file an Australian income tax return annually and pay any applicable taxes.
Annual Vacancy Fee Return: Even if your property is occupied, you must submit a vacancy fee return each year. If the property is vacant for more than 183 days or if the return isn't lodged on time, a vacancy fee will apply.
Special Notes on Vacancy Fee Returns
What is a Vacancy Year: A vacancy year is each successive 12-month period starting from the property's "occupation day." For example, if your apartment settled on October 5, your vacancy year begins on October 5 each year.
When to Lodge: You must lodge the return within 30 days of the end of each vacancy year.
How "Occupied" is Defined: A dwelling is considered "occupied" if it's used for residential purposes for at least 183 days in a vacancy year by: the owner or a relative, or rented under a lease or license with a minimum term of 30 days. Note that short-term rentals (leases less than 30 days) aren't considered occupied and will incur the vacancy fee.
Joint Ownership: For properties held as Joint Tenants, only one vacancy fee return needs to be lodged. For properties held as Tenants in Common, each owner must lodge their own separate vacancy fee return.
Penalties: Failure to lodge the return on time may result in penalties, even if your property met the occupancy requirements.
Situations Where Vacancy Fee Exemption May Apply: If you have a vacancy fee liability, but circumstances beyond your control (like property damage, extensive renovations, or long-term medical care preventing occupancy or timely lodging) made the dwelling uninhabitable or prevented timely lodging, you can apply for an exemption. Please remember that even when applying for an exemption, you still need to submit your vacancy fee return.
Conclusion
Australia’s policies and fees for foreign property buyers are becoming increasingly stringent, covering purchase approvals, vacancy reporting, and other obligations. Non-residents must thoroughly understand the relevant regulations before investing, ensure compliance, and avoid incurring substantial costs or penalties for breaches.
Source:
Foreign investment in Australia, ATO website.