Foreign Investment Rules: What Overseas Buyers Need to Know About Australian Property Laws - March 2025

By Guest Blogger, Malisa Howard, Principal Solicitor - Jaidie Law

Next Level Wealth 

Australia’s property market has long been a hotspot for overseas investors—but recent headlines about a temporary federal ban on some foreign purchases have caused confusion. Many buyers are unsure what’s actually allowed, what’s changed, and whether they can still invest in property. The good news? In most cases, you still can—if you play by the rules.

In this guide, we clear up the confusion and break down what foreign investors really need to know about buying property in NSW, Victoria, and Queensland—from FIRB approvals to tax traps and legal restrictions.

1. FIRB Approval – Your First Step

Foreign investors must obtain approval from the Foreign Investment Review Board (FIRB) before purchasing property in Australia. This ensures that foreign investments align with national interests. Skipping this step can lead to severe penalties, including forced property divestment and significant fines.

Who Needs FIRB Approval?

• Non-resident foreign buyers (individuals or entities, with limited exceptions)
• Temporary residents
• Foreign corporations or trusts

• New Dwellings: Generally permitted.
• Vacant Land: Allowed, provided construction commences within four years.
• Established Dwellings: Typically restricted, with exceptions for redevelopment or if purchased by temporary residents for use as a primary residence.

💡 Tip: Apply for FIRB approval before signing a contract—or at least make the contract conditional on FIRB approval.

2. Tax Implications – Understanding Your Obligations

Foreign investors are subject to additional taxes and surcharges, which vary by state and can significantly impact your overall investment costs.

Stamp Duty Surcharges: Each state imposes a surcharge on top of standard stamp duty – these are updated from time to time, but are currently:

• NSW: 8%
• VIC: 8%
• QLD: 7%

Land Tax Surcharges: Foreign owners are also liable for ongoing land tax surcharges:

• NSW: 5% (applicable from the 2025 land tax year)
• VIC: 4%
• QLD: 3%

These surcharges are on top of standard land tax rates and apply annually—so they’re critical to factor into your long-term holding costs.

Capital Gains Tax (CGT): Foreign residents must pay CGT on gains from Australian property. Importantly:

• Foreign owners cannot claim the main residence exemption, even if they previously lived in the property.
• Recent reforms have increased ATO scrutiny and compliance requirements.
  
  

3. Legal Restrictions – Property Type Matters

Australia’s property laws aim to direct foreign investment toward increasing housing supply—and a new twist has just been added.

From 1 April 2025 to 31 March 2027, the Australian Government is implementing a temporary ban on foreign investors purchasing established (second-hand) dwellings. The goal? To ease pressure on the housing market and increase access to homes for Australian residents.

Here’s how the current framework looks under this new restriction:

• New Dwellings: Still generally approved.
• Off-the-plan properties: Allowed if part of a qualifying development.
• Vacant Land: Permitted, but construction must commence within four years.
• Established Properties: Now prohibited for purchase by foreign investors (with some narrow exceptions), unless you're:
  • A temporary resident buying a home to live in (not for investment), or
  • Making a purchase that will significantly increase housing supply, such as major redevelopment projects.

The ban will be reviewed at the end of the two-year period, so keep an eye on updates if you're planning a long-term investment strategy.

And a reminder: breaching FIRB conditions—like renting out a home you were only approved to live in—can result in significant penalties, including forced sale or fines. Make sure your intended use aligns with your FIRB approval terms.

4. Ownership Structures – Strategic Considerations

The way you structure your purchase can significantly affect your tax exposure and approval requirements.

Common options include:

• Personal name
• Australian company
• Unit trust or discretionary trust

Be cautious: if your trust has any potential foreign beneficiaries—even on a discretionary basis—it may still trigger surcharge land tax and stamp duty. Similarly, company structures with foreign shareholders are not exempt.

A tailored structure, designed with help from a property lawyer and tax advisor, is often the difference between a savvy investment and a surprise bill.

5. Case Study – FIRB Timing Pitfalls

Scenario: A foreign investor signed an unconditional contract for an established Sydney terrace, unaware that FIRB approval was required. Their FIRB application was refused. The result? The contract was void, and the buyer lost their deposit, as their lawyer had not negotiated that the contract was subject to FIRB approval.

Lesson: Always get FIRB approval (or make the contract subject to it) before locking yourself in.

Wrapping Up – Key Takeaways

If you're a foreign investor looking to buy property in Australia, particularly in NSW, Victoria or Queensland, here’s what you need to remember:

✅ FIRB approval is mandatory for most residential purchases—get it early

✅ Budget for stamp duty and land tax surcharges

✅ Understand what types of properties you're legally allowed to buy

✅ Structure your purchase wisely to avoid unnecessary tax traps

✅ Line up finance early, with the right help

At Jaide Law, we help overseas investors navigate FIRB, negotiate contracts, and protect their investments with confidence. Whether you’re buying one property or building a portfolio, we make sure you’re set up for success from day one.

If you’ve got questions about a property matter, we’d love to help. Feel free to reach out to us at contact@jaidelaw.com.au - we’d love to help you make your next transaction a smart and stress-free one.

Disclaimer – We know most of you get this, but just to be clear, the information above is general and doesn't consider your unique situation. Please don't rely on it as a substitute for professional advice. We strongly encourage you to seek appropriate guidance for your specific needs.

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