Residential July/26
Spotlight on international investment: Understanding Australian residential property.
4. Buying a new residential property
7. Cost to buy: New South Wales
8. Cost to buy: Victoria
9. Cost to buy: Queensland
10. Cost to buy: Tasmania
11. Cost to buy: Australian Capital Territory
12. FIRB table of application fees
13. Ownership
14. Renting out a property
15. Selling
The current rules around international non-resident buyers investing in Australian residential property aim to direct investment into new housing, increase the housing supply and support local economic activity.
Before purchasing a residential property in Australia, all international investors must be approved by the Foreign Investment Review Board (FIRB) who advises the Australian government treasurer and is then administered by the Australian Taxation Office (ATO)
Generally, you are a foreign person if you intend to buy Australian residential property, and you are not a: citizen of Australia permanent resident of Australia, or New Zealand citizen with a special category visa
Why is international investment important for Australia?
Currently, one-third of Australia’s privately owned residential homes are rented to tenants for investment purposes
Social housing projects have diminished over past decades, reducing the number of homes provided directly by the federal, state and local governments The privately-owned rental pool has attempted to fill this shortfall throughout this time, but also now suffers an ongoing undersupply of new homes available for rent.
With the exception of the pandemicrelated disruption, Australia’s rental market has historically remained undersupplied, with residential vacancy rates generally below the 3% equilibrium level.
Residential rental growth has been on a significant upward trajectory over the past five years as a result of this low vacancy.
Residential rental vacancy
Australian cities and regional areas, Q1/26
Tracking residential weekly rents
Australian cities and regional areas, Q1/26
Key milestone steps for a foreign non-resident buying an Australian residential property
Confirm eligibility
Ensure you are permitted to purchase a property under Australia's foreign investment rules
Choose a suitable development
Select a new apartment, townhouse or other off-the-plan project
Foreign buyers are mostly restricted to buying only new dwellings.
Arrange finance and funds
Understand lending requirements, deposit requirements and additional foreign buyer costs.
Obtain FIRB approval (or confirm developer exemption)
Apply through the ATO's foreign investment process unless the developer's exemption certificate applies.
Review the contract with a solicitor Pay particular attention to sunset clauses, completion dates, defect provisions and purchaser obligations
Sign the contract and pay the deposit Exchange contracts and lodge the required deposit, typically before construction is completed
Monitor construction and prepare for settlement Finalise finance, transfer funds and complete any pre-settlement inspections as construction nears completion
Settle and take ownership
Pay the balance of the purchase price, complete settlement and register ownership
new
Buying off-the-plan refers to purchasing a property before it's been built, based on architectural plans and developer information.
This means buyers commit to a property that doesn't yet exist and will be constructed in the future, often in new developments.
Developers are keen to secure sales in the project so lenders will provide their funding and construction can commence.
There is also the potential flexibility at this time to make design changes to a house or apartment before construction begins
When purchasing an off-the-plan property in Australia, you typically pay a deposit of around 10% of the purchase price to the developer upon signing the contract
The remaining balance is then due upon completion of the construction. This allows buyers more time to save and arrange financing before the final settlement
Throughout this time, an upswing in the market may push values up, with higher prices being an advantage to the buyer At the same time, consideration must be taken the market could experience a downturn over this time
Engaging a solicitor or conveyancer prior to purchasing the property is highly recommended so they can review the contract before signing, and then stay engaged throughout the process until the property settles and when the property officially changes ownership.
It’s recommended for this type of investment, that contracts are reviewed by legal representation and the ‘sunset clause’ explained.
The sunset clause is a statement in the contract of sale that effectively puts a time limit on the contract's validity, or in other words, places a deadline for the construction timeline
Should a development not proceed, deposits will be returned, but this could be at the expense of missed interest and capital gains through other investments.
Developers can secure FIRB approval on your behalf with exemption certificate
Property developers who have multiple new or near-new dwellings in a development, can apply for a New or near-new dwelling exemption certificate to sell to a foreign person
If you are a foreign person and are buying a new or near-new dwelling from a developer who has a New or near-new dwelling exemption certificate, you do not need to apply for approval to buy the property
The developer's exemption certificate provides approval for a foreign person to purchase a single or multiple dwellings within the development, up to the value of $3 million
For purchases over $3 million, the foreign person must apply for their own foreign investment approval
When buying property in Australia, there are both federal and state taxes and a range of fees that are implemented
Transfer duty (also known as stamp duty) is levied by the state government on the purchase of property.
Land transfer fee
When a property changes ownership, a document known as a Land Transfer is lodged and registered with the state government based revenue office, and a fee is charged.
This document records the change of ownership The cost to register the title varies in each state of Australia
A solicitor or conveyancer will perform this task on behalf of the purchaser.
Mortgage application
A fee charged by the state government for the registration of a mortgage A lender will perform this task on behalf of the purchaser
Legal fee
Legal fees are paid to a solicitor or conveyancer for preparing the contract for sale The fee can vary and is dependent on the value of property Current estimates average $2,000 including the Goods and Services Tax (GST) for this service
Before purchasing a residential property in Australia, all foreign investors must apply to the FIRB before the application will be processed, unless the developer has already obtained an exemption certificate, as previously outlined
For individual applications, allow the statutory timeframe of 30 days for the FIRB to make a decision This process will not start until the correct fee has been paid at the time the application made via the ATO portal
It’s important to note that seeking approval from the FIRB is property-specific; therefore one application per property Also the fee on application does not provide any assurance of securing the property
In addition to standard transfer duties payable, most state governments impose a transfer duty surcharge for foreign owners, based on the residential property’s market value. This varies across the states and territories of Australia with those imposing a surcharge being outlined in the table below
What is the estimated cost to buy a residential dwelling for a non-resident foreign buyer?
An estimate of costs (AUD) to buy a residential dwelling for a non-resident foreign buyer in New South Wales (NSW) has been outlined in the table below
The worked examples are based on calculators available from Oxygen, FIRB and the NSW state government with each cost rounded up to the nearest $5, as at 6 July 2026
What is the estimated cost to buy a residential dwelling for a non-resident foreign buyer?
An estimate of costs (AUD) to buy a residential dwelling for a non-resident foreign buyer in Victoria has been outlined in the table below
The worked examples are based on calculators available from Oxygen, FIRB and Victorian state government with each cost rounded up to the nearest $5, as at 6 July 2026
What is the estimated cost to buy a residential dwelling for a non-resident foreign buyer?
An estimate of costs (AUD) to buy a residential dwelling for a non-resident foreign buyer in Queensland has been outlined in the table below
The worked examples are based on calculators available from Oxygen, FIRB and Queensland state government with each cost rounded up to the nearest $5, as at 6 July 2026.
What is the estimated cost to buy a residential dwelling for a non-resident foreign buyer?
An estimate of costs (AUD) to buy a residential dwelling for a non-resident foreign buyer in Tasmania has been outlined in the table below
The worked examples are based on calculators available from Oxygen, FIRB and Tasmanian state government with each cost rounded up to the nearest $5, as at 6 July 2026
What is the estimated cost to buy a residential dwelling for a non-resident foreign buyer?
An estimate of costs (AUD) to buy a residential dwelling for a non-resident foreign buyer in the Australian Capital Territory (ACT) has been outlined in the table below
The worked examples are based on calculators available from Oxygen, FIRB and the ACT government with each cost rounded up to the nearest $5, as at 6 July 2026
What FIRB fees are payable at each price point?
FIRB provides transparency for application fees payable by an individual for new dwellings The table below is representation of these fees, as at 1 July 2026
Most residential dwellings are purchased as freehold property in Australia. This means the land and building are owned outright in perpetuity, under the Torrens title system
The same exists for strata title, although ownership allows individuals to own part of a property (or ‘lot').
This is combined with shared ownership in the remainder, or common property, through a legal entity known as the owners corporation.
Costs and taxes associated with the ownership of a property can vary dependent on the services the building provides
Land tax is an annual state tax that is calculated based on the aggregated taxable value of all land owned (or jointly owned) by an individual
Land Tax is not applied if the property is considered your principal residence
Council rates vary across each state and local government areas This is the tax the council charges owners for the services to the property and is generally paid quarterly or annually
If the purchased property is strata titled, an owners corporation will be established for the building
A strata titled building has common areas and facilities for the use of all occupants of the building
A regular levy must be paid to the owners corporation to maintain and repair these common areas. This can include foyers, elevators, gardens, swimming pools, gymnasiums, visitor parking areas, security and lighting.
The owners corporation comprises an executive committee who make decisions on behalf of all owners, generally comprising individual apartment owners within the complex
Vacancy fee | Australia-wide
The Australian government charges an annual levy for foreign-owned vacant residential properties, also known as a ghost tax A vacancy fee is payable when your residential property is vacant for 183 days (6 months) or more in one vacancy year.
By living in the dwelling or making it available for rent, you may not need to pay the fee The levy is equivalent to two (2) times the FIRB application fee imposed at the time the property was purchased
Land tax surcharge | state
In addition to standard land tax payable, most state governments impose a land tax surcharge for foreign owners, based on the residential property’s taxable value This varies across the states and territories, see table below
What responsibilities do you have when renting out a home in Australia?
There are costs and taxes associated with being a landlord and renting out an investment property
Letting fees
Letting fees are paid to a property manager to secure a tenant for the residential property The fee is equivalent to 110% of a weeks rent.
Property management fees
Management fees cover any costs associated with managing the property The fee generally ranges from 6 6% to 8 8% (including GST)
Utility and service charges
The owner generally pays for council, water and strata levies. Electricity and gas are paid by the tenant if separately metered
The owner must pay for the initial and/or replacement installation and connection costs In some cases, the water usage cost can be passed on to the tenant, if compliant and separately metered
Landlord insurance
Landlord insurance is recommended and designed specifically to cover residential rental properties
Depending on the insurance provider, it protects the home from damage, theft, severe weather and/or rent default in some cases
Income tax
Income tax is payable on gross rental income, less any allowable deductions incurred in earning that income
To understand the number of potential allowable tax deductions, it is recommended an Australian tax advisor is consulted
A tenancy agreement (lease) is a contract where the landlord (owner) allows the tenant (renter) to occupy their residential property for a specified length of time (term), in return for a regular payment (rent) after a security (bond) is paid
Rental applications from potential tenants are submitted to the property manager with proof of identity, ability to pay rent and good references
The term of a tenancy can vary, although the standard term is six (6) or twelve (12) months for the initial agreement Alternate periods may be negotiable on the requirements of the landlord and/or tenant, depending on state legislation.
Rent is the regular payment from the tenant, to the landlord, and is normally paid via the property manager on a weekly, fortnightly or monthly basis Future rent increases are discussed at the expiry or anniversary date of the last increase
The bond is an upfront lump sum security of four (4) weeks rent paid by the tenant and returned if the vacated property is left in the same reasonable condition less fair wear and tear
Termination occurs when the tenancy agreement is breached. However, both landlord and tenant can request to end the tenancy for several reasons with conditions met such as, suitable days notice, number of notices and reason for termination, depending on state legislation
There are standard costs and taxes payable when selling residential property in Australia
Legal fee
Legal fees are paid to a solicitor or conveyancer for preparing the contract for sale.
The fee can vary and is dependent on the value of property Current estimates average $2,000 (including GST) for this service
An agent fee is the commission paid by the owner, to the agent, for selling their property The agent will provide a breakdown of the fee structure which should be agreed to be either tiered or at a fixed rate
Industry average fees range between 2% and 3% of the value of the property sold.
When a selling agent is selected to sell the property, the agent fee breakdown will often stipulate the budget associated towards marketing and advertising the property
Budgets for marketing, media, as well as length of advertising should all be agreed with the agent to ensure maximum advertising potential for the home.
Capital Gains Tax (CGT) is a federal tax levied on the gain or loss on the sale of an investment property For further information contact the ATO
The Foreign Resident Capital Gains Withholding (FRCGW) must be applied on to all residential property sales.
This is unless the vendor is an Australian resident for tax purposes with a valid clearance certificate issued by the ATO or a foreign resident (non-resident) with a variation notice specifying a reduced rate
A FRCGW rate of 15% applies to the market value of property contracts signed on and after 1 January 2025 For further information, contact the ATO
The Foreign Investment Review Board (FIRB) is the Australian Government body which reviews foreign investment proposals and advises the Government on whether proposed investments are consistent with Australia's foreign investment framework and national interest Website: www.foreigninvestment.gov.au
The Australian Taxation Office (ATO) is the federal government agency responsible for administering Australia's tax laws, including those relating to property ownership, capital gains tax and foreign investment compliance Website: www.ato.gov.au
Goods and Services Tax | GST Goods and Services Tax (GST) is a 10% tax that may apply to certain property transactions in Australia, particularly new residential properties and commercial real estate, while most sales of existing residential homes are GST-free
All monetary values in this report are expressed in Australian dollars (AUD) unless otherwise stated
Guiding you home
Michelle Ciesielski National Head of Research McGrath Research
www.mcgrath.com.au/research
Find an agent
Davey Hong Head of Asia Desk, McGrath
daveyhong@mcgrath com au +61 424 603 824
Adam Ross Head of International & Private Clients, McGrath adamross@mcgrath com au +61 409 663 051