Foreign persons generally need to apply and receive foreign investment approval before purchasing new dwellings. Applications to purchase new dwellings are usually approved without conditions.
A new dwelling is a dwelling that will be, is being, or has been built on residential land, has not been previously sold as a dwelling and has either:
- Not been previously occupied; or
- If the dwelling is part of a development, was sold by the developer of that development and has not previously been occupied for more than 12 months in total.
New dwellings do not include established residential real estate that has been refurbished or renovated.
A single dwelling that has been built to replace one or more demolished established dwellings would generally not be considered a new dwelling for the purposes of Australia’s foreign investment framework.
Foreign persons generally need to apply and receive foreign investment approval before purchasing vacant residential land for development.
Foreign persons will normally be allowed to purchase vacant land for residential dwelling development, subject to conditions that:
- The development is completed within four years from the date of approval; and
- Evidence of completion of the dwelling/s is submitted within 30 days of being received. This could include a final occupancy or builder’s completion certificate.
Vacant land that previously has an established dwelling on the land would generally not be considered as vacant land for the purposes of Australia’s foreign investment framework.
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Property developers and other vendors can apply for an exemption certificate to sell new dwellings in a specified development to foreign persons, without each foreign person purchaser being required to seek their own foreign investment approval (similar to what has previously been known as an ‘advanced off-the-plan’ certificate).
Developers (either Australian or foreign) can apply for a new dwelling exemption certificate provided that the development:
- will consist of 50 or more dwellings;
- has development approval from the relevant government authority; and
- if applicable, that foreign investment approval was sought to purchase the land and that any conditions are being met.
Applications for a certificate will be considered on a case-by-case basis to ensure they are not contrary to the national interest.
The certificate, if granted, will normally be approved subject to conditions that the developer:
- provide a copy of the Certificate to each prospective foreign purchaser;
- provide a report (timing defined by the certificate) which includes all of the information requested in the New Dwelling Exemption Certificate Report either:
- ensure that the Development is marketed in Australia.
As announced on 26 November 2016, the Government will implement changes under the foreign investment framework to allow foreign buyers to purchase an off-the-plan dwelling when another foreign buyer has failed to reach settlement.
This will include a regulation change to introduce a new exemption certificate which will cover sales by developers to foreign persons purchasing a dwelling that is considered established only due to a failed settlement. The Commissioner of Taxation has advised that no compliance action will be pursued against persons who, if not for a failed settlement preceding their purchase, would otherwise have been covered by an existing New Dwelling Exemption Certificate until the regulations are changed.
Developers must still record the details of the new foreign person purchaser and provide them to the ATO with the details of other sales made under a New Dwelling Exemption