Australian Property | Overseas Buyers, Take Note: These Are Issues You May Never Have Known About!

Many overseas investors buying property in Australia have suffered losses because they were unaware of the specific Australian laws and regulations, or unfamiliar with the local market. Today we'll use real-world examples to explain some rules you may not know about.

1. When an overseas buyer purchases land, can it be resold before construction begins?

Yes, it can. In some cases, for various reasons, overseas investors are unable or unwilling to commence construction after purchasing the land, or an opportunity arises to resell the land to a new buyer. Currently there is no law preventing an overseas investor from reselling that land to someone else.

Furthermore, under FIRB policy, overseas investors cannot buy established properties. In practice, however, there is "established housing, but no established land" — meaning that before any building has been erected on it, the land is not classified as an existing dwelling. It is therefore not subject to the "established property" restriction and can be purchased by a new overseas investor. Put simply, if an overseas investor buys an apartment in Australia, after handover it cannot be sold to another overseas person and can only be sold to a local with residency status. But if they purchase Australian land, then after the land handover and before construction of the dwelling, it can be sold to either locals or overseas investors. This gives the pool of eligible buyers for a land transfer a much wider scope, making it more convenient for overseas investors who have bought land but are unable to build to transfer it on.

2. The vacancy fee return for overseas persons

Some clients have received a penalty notice from the Australian Taxation Office (ATO) regarding a vacant property, when in fact the property was not vacant at all — they had simply forgotten one step: lodging their annual vacancy fee return. If there is a dwelling on your land, you must lodge an annual vacancy fee return within 30 days of the end of each 12-month period of your ownership, known as a vacancy year. If your dwelling is not occupied or genuinely available for rent for more than 183 days in a vacancy year, you may be liable to pay a vacancy fee.

The ATO will usually send you a reminder letter via the email address you provided on the Register of Foreign Ownership of Water or Agricultural Land, prompting you to lodge your vacancy fee return. This email contains the information you need to lodge your return. Please note that regardless of whether the property was occupied for 183 days within the year, overseas owners are still required to lodge the return. If, based on the information submitted, the ATO determines that no vacancy fee is payable, no fee will be charged.

Even if you do not receive a reminder letter, you still need to lodge your vacancy fee return. If you have not yet registered your property on the land and water register, and have not received a vacancy fee reminder, please lodge with the land and water register first. There is no charge for registration.

If your property is vacant land, you only need to lodge a vacancy fee return once a dwelling has been built on that land.