There are some crucial steps to follow if you want to buy real estate in South Australia and you are a ‘foreign person’.
As conveyancers, we have checks in place to confirm with property buyers if they are foreign or not, but with a range of penalties at stake, it is always wise for all foreign buyers to be prepared.
So now that the dust has settled on the Federal Government’s recent changes to the Foreign Investment Review Board (FIRB) regime, I thought it would be time to create a simple summary of the main points.
The main focus of this article will be on foreign investment regulations relating to buying residential property and I hope that you will find this article helpful for your own reference before buying real estate or suitable for sharing among your networks to help others.
How do foreign investment regulations affect buying homes?
At its foundation, the cluster of regulations relating to foreign ownership of Australian real estate, comes down to whether or not an acquisition is in Australia’s national interest.
The regulations divide acquisitions into two main types:
- Those that are Significant Actions
- Those that are Notifiable Actions
Significant Actions are those that meet particular percentage interests and monetary thresholds and tend to be of a much grander scale than my focus in this article, which is residential real estate.
For our purposes, any residential real estate purchase of any value by a Foreign Person, is best considered a Notifiable Action and therefore you must notify the Treasurer.
The Treasurer will decide to:
- Not object to the purchase
- Place conditions upon the purchaser
- Prohibit the purchase on the grounds of being contrary to our national interest
It is worth noting the risk of not notifying is that the Treasurer can decide at a later date that the purchase should not have happened and then make a disposal order; forcing the sale of the property almost immediately.
A nod from the legal department
One of the quirks of these regulations is that notifying the Treasurer of Notifiable Actions is actually voluntary.
It would be prudent for all foreign property buyers to take the initiative and notify the Treasurer directly, for peace of mind personally and financially, and to make sure you are not liable for criminal penalties of up to $135,000.
If you are in undecided, I would encourage you to seek legal advice from a firm such as our sister firm, Eckermann Lawyers, so you are completely aware of your options, the benefits and the risks of not notifying.
Eckermann Conveyancers does not handle applications for notifying the Treasurer but this can be done directly via this link to the Australian Taxation Office.
At the time of writing, it will cost you $5,000 to notify the Treasurer about purchases of $1 million or less.
For properties sold for more than $1 million, you will pay $10,000 for each million, eg, $1.5 million would be $10,000, $2 million would be $20,000, and so on.
There are also provisions for new dwellings.
While the regulations do appear complex at first, the simple rule of thumb is that anybody who wants to buy residential real estate in South Australia but is not an Australian citizen, should notify the Treasurer beforehand or make sure that land contracts are sign subject receiving a ‘no objection’ notification.
Rest assured, by choosing Eckermann Conveyancers as your conveyancing team in South Australia, any real estate transactions we are helping to settle will have this issue brought to a head almost immediately, so nobody is left with nasty surprises.