Understanding FIRB Approval: What Foreign Investors Need to Know

Understanding FIRB Approval: What Foreign Investors Need to Know

Australia’s real estate market continues to attract global attention, offering long-term stability and capital growth potential. However, if you’re a non-resident looking to invest in Australian property, understanding the Foreign Investment Review Board (FIRB) approval process is essential. FIRB ensures that foreign property purchases align with national interests—and failing to follow the rules can result in serious consequences.

What Is FIRB Approval and Who Needs It?

FIRB is a government body that regulates foreign investment in Australian property. If you’re not an Australian citizen or permanent resident, you’ll likely need approval before buying residential property.

Foreign investors who typically require FIRB approval include:

• Non-resident individuals looking to invest in real estate

• Temporary visa holders intending to purchase residential property

• Foreign companies seeking to acquire Australian property assets

On the other hand, FIRB approval is not required for:

• Australian citizens, even if they live overseas

• Permanent residents of Australia

• New Zealand citizens

What Types of Property Can Foreign Investors Buy?

There are clear limitations on the types of property that non-residents can purchase in Australia. These rules are designed to prioritise new housing supply and prevent foreign competition from inflating prices of established homes.

Foreign investors are generally allowed to purchase:

• New or off-the-plan developments

• Vacant land (as long as development occurs within four years)

• Commercial properties, depending on the type and value

However, restrictions apply to:

• Established (second-hand) residential properties, unless the investor plans to redevelop and increase housing stock

• Buying for personal use without meeting strict exemption criteria

How to Apply for FIRB Approval

The FIRB application process must be completed before settlement and ideally before entering into a binding contract. Delays or failure to comply can result in financial penalties or legal issues.

Here’s a general step-by-step overview:

• Review FIRB eligibility requirements and determine if approval is needed

• Lodge an application through the ATO’s online FIRB portal

• Pay the applicable application fee (based on property value)

• Wait for a response—processing typically takes 30 days

• Finalise the property purchase once approval is granted

For complex or high-value transactions, additional time or scrutiny may apply.

What If You Skip FIRB Approval?

Failing to obtain FIRB approval before purchasing can be extremely costly. The penalties are not just financial—your future ability to invest in Australia may also be affected.

If FIRB approval is bypassed:

• You may face large fines and enforcement action

• The government may force the sale of the property

• You could encounter difficulties with future investment approvals

The safest approach is to ensure FIRB approval is secured before you commit to any purchase.

Selling Property as a Foreign Investor

Foreign investors are permitted to sell property in Australia, but tax obligations still apply. It’s important to understand how profits from the sale will be treated.

Key points include:

• Capital Gains Tax (CGT) applies on any gain from the sale of an Australian property

• A 12.5% foreign resident withholding tax applies to property sales over $750,000 unless an exemption is granted through the ATO

Understanding these costs ahead of time helps you manage cash flow and structure your exit strategy more effectively.

FIRB approval is an essential part of investing in Australian property as a foreign buyer. By understanding the rules early and working with experts, you can avoid delays, penalties, and missed opportunities. If you’re unsure whether FIRB approval applies to your situation, it’s always worth seeking professional guidance.

Looking to invest in Australian property as a foreign buyer? Book an investment session with PropVest today.

Disclaimer: This article is for general information only and does not constitute legal, financial, or tax advice. You should always consult with qualified professionals before making any property investment decisions.