Thinking about entering a foreign property market? There are some rules, regulations and risks to consider when investing overseas.
International Investors in Australia
If you’re not an Australian resident, but you would like to own a little piece of the country down under there are a couple of rules you will need to consider.
Australian rules for foreign property investment are based on several factors, including how much you wish to invest, whether you’re a part-time resident or non-resident, and the type of dwelling you want to purchase.
If you are a temporary resident, you are able to buy one existing dwelling to live in, and beyond that you can only buy new dwellings or vacant land with plans to build on it for investment purposes - this is to encourage the building of more housing. Temporary residents are not allowed to purchase already established dwellings for investment.
On the other hand if you are a non-resident (also referred to as foreign resident) you may only buy in Australia if your purchase adds to the local property market. Therefore, you may invest in new dwellings, off-the-plan properties that are under construction or to be built, or land with plans to develop and build.
Due to the fact that as a foreign resident you do not reside in Australia, you may not buy existing properties, unless you demolish the established dwelling with the view to redevelop the land - and therefore add to the housing stock - within four years of approval.
The approval of applications for foreign residents to buy new properties may be straightforward, however applications for development purposes are often subject to conditions, such as timeframes in which construction must begin.
Australian Investors Investing Overseas
Conversely, for some Australians the idea of investing overseas presents some exciting opportunities. It could be an effective way to diversify your portfolio, present an opportunity to invest with lower upfront costs or the potential for tax benefits. It could also help you generate cash flow in another currency and increase your chances of qualifying for residency.
However, investing in property overseas certainly won’t be for everyone, as there are some important considerations to be aware of before taking the plunge. The first issue you might come across is financing the loan, securing finance for an international property may be different to what you have experienced with your local investments and will require more research and expert advice.
As with all property investments, research is key. It’s a good idea to understand the outlook for the economy and the housing market in the country you’re interested in, as well as how property sales and rental prices have performed in recent years and if there are any government regulations or tax implications that could put challenge your investment.
These questions and the answers can be confusing, so seeking professional financial advice is imperative to help you overcome your lack of local knowledge and the inherent difficulties and risks.
If you are considering an international investment - whether you are an Australian resident or not -you’ll need to shop around when hunting for the right solution for your borrowing needs. Speak to an Aussie Broker to find out how they can help.
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- Chapter One : Things to consider before investing in property
- Chapter Two : Determining where to invest
- Chapter Three : Investment Properties by Dwelling Types
- Chapter Four : Finance for Your Investment Property Purchase
- Chapter Five : How to Invest in Property
- Chapter Six : Adding Value to Your Investment Property
- Chapter Seven : Positive and Negative Gearing
- Chapter Eight : Getting Your loan
- Chapter Nine : Selling your Investment Property