[BUYING AND SELLING REAL ESTATE IN AUSTRALIA]
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prior to the property being transferred. This means that contracts of sale for property by a “foreign person” are typically conditional on the purchaser obtaining FIRB approval within a specified time. If FIRB approval is not obtained, then the contract can be terminated. A “foreign person” not only includes an individual who is not ordinarily resident in Australia, but it also includes: • a corporation or the trustee of a trust in which an individual not ordinarily resident in Australia, a foreign corporation or a foreign government holds a substantial interest; and • a corporation or the trustee of a trust in which 2 or more persons, who together hold an aggregate substantial interest , are: (a) not ordinarily resident in Australia; (b) a foreign corporation; or (c) a foreign government entity. A “substantial interest” for the purposes of the above means an interest of 20% or more in the relevant company or trust. There are certain restrictions imposed when dealing with the purchase of residential and commercial property by “foreign persons”. Generally, foreign persons are unable to purchase existing residential dwellings unless they are a temporary resident (at a minimum). Foreign non-residents have the ability to purchase ‘new dwellings’ within Australia. A new dwelling is defined as being a dwelling that has not been previously occupied or a dwelling within a development that has not been occupied for more than a total of 12 months. These parameters aim to encourage the creation of jobs within Australia and also
increase the number of new residences being developed. There is no monetary threshold for the purchase of residential property, but there is a threshold for the purchase of developed commercial property. If you are a permanent resident in Australia or if you are from New Zealand, exemptions apply and FIRB approval is not required prior to acquiring an interest in Australian property. If you are a temporary resident, it is likely that you will be granted FIRB approval to purchase vacant land or a residential dwelling off-the- plan, however, the approval is likely to be subject to conditions. The overarching policy objective behind the FIRB’s regulation of foreign investment into Australian companies and businesses is to ensure that any proposed foreign acquisitions are not contrary to Australia’s national interest. OWNERSHIP STRUCTURE When looking to acquire property in Australia, it is important to consider the most appropriate legal structure in which to own the property. The key issues will be asset protection, taxation issues, stamp duty, land tax, estate planning, complexity and cost. It is important that specific legal and accounting advice is obtained before deciding upon what is the most appropriate structure for ownership of the property. The most common structures are individual, company, trust, partnership and joint venture. It is also possible to buy an interest in a property by buying shares or units in the ownership structure. Individual Ownership by an individual is the simplest option. It means that all debts and liabilities attached to the property will be the responsibility of the individual. The individual will have sole control of the property. An
ILN Real Estate Group – Buying and Selling Real Estate Series
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