Foreign Buyer Rules for Australian Property: FIRB Approval, the Established-Dwelling Ban, and What It Costs in Victoria

Who counts as a "foreign person"

The definition is broader than "not an Australian citizen", and getting your own status wrong is the most common way people end up in breach without intending to be.

Broadly, the framework treats as a foreign person an individual who is not ordinarily resident in Australia; a corporation, trustee of a trust or general partner of a limited partnership in which a foreign person holds a substantial interest; and a foreign government or foreign government investor. Australian citizens and permanent residents ordinarily resident in Australia are not foreign persons.

Two situations cause most of the confusion. The first is temporary residents — student, skilled and partner visa holders. Their treatment has historically differed from that of non-residents and it turns on the specific visa and on residency, not on how long you have been here. The second is companies and trusts: a company that is Australian in every commercial sense can still be a foreign person for this framework if a foreign person holds a substantial interest in it, and a discretionary trust with a foreign beneficiary is a well-known trap.

Because both turn on facts about you rather than facts about the property, this is a question to put to a property lawyer or migration lawyer before you make an offer. We do not assess anyone's foreign-person status and no article should be relied on to do it.

The established-dwelling ban, 1 April 2025 to 30 June 2029

From 1 April 2025 foreign persons are generally prohibited from purchasing an established dwelling in Australia. The measure was originally implemented for two years from 1 April 2025; the 2026-27 Budget extended it by two years and three months, to 30 June 2029. If you are reading an article that says the ban ends on 31 March 2027, it predates the extension — that is the single most repeated error on this topic.

One drafting point worth understanding, because it explains how the ban actually operates: it is a Government policy, applied through the foreign investment approval and national-interest process under the Foreign Acquisitions and Takeovers Act 1975, rather than a standalone statutory prohibition. The Foreign Investment Review Board's own guidance describes it as the Government's policy that foreign persons are generally banned. The practical effect for a buyer is the same — an application to acquire an established dwelling will not be approved — but it means the rule can move by announcement rather than only by amending legislation, which is exactly what happened when the end date changed.

An established dwelling, for this purpose, is a residential dwelling that has previously been occupied or sold — in practice, the second-hand housing market. It is the category that makes up the overwhelming majority of listings on any Australian portal, which is why the ban is a much larger change in practice than its narrow drafting suggests.

The exceptions are limited and specific, and each is narrower than the shorthand versions circulating online:

• Redevelopment that significantly increases Australia's housing stock — and the guidance sets a threshold: the redevelopment must deliver at least 20 additional dwellings. A one-into-two knockdown-rebuild does not qualify, which is the most common misunderstanding of this exception.
• A separate exception covers acquisitions supporting the availability of housing on a commercial scale — build-to-rent, retirement villages, aged care and purpose-built student accommodation.
• Acquisitions by foreign-controlled companies that employ workers from Pacific island countries and Timor-Leste, including but not limited to those participating in the Pacific Australia Labour Mobility (PALM) scheme.
• New Zealand citizens are, in practice, outside the framework — but the mechanism is not citizenship as such. It is eligibility for a Special Category Visa, which is what removes the requirement to seek foreign investment approval. Australian permanent residents are separately exempt.

What a foreign person can still buy

Two categories remain open, in both cases subject to foreign investment approval.

New dwellings. A dwelling that has not previously been sold as a dwelling and has either not been occupied, or is part of a development and was sold by the developer and occupied for less than twelve months. Off-the-plan apartments are the obvious case, and they are why the new-apartment market in Melbourne and Sydney has a materially different buyer mix from the house market.

Vacant residential land. Approvals in this category have historically carried development conditions — an obligation to complete construction within a set period — so the land is not a passive hold. Confirm the conditions attached to your own approval rather than assuming the general position.

Commercial property sits outside this measure entirely. The established-dwelling ban is a residential measure; commercial acquisitions are assessed under a different part of the framework with different monetary thresholds and a different fee scale.

FIRB application fees

Foreign investment application fees are set by a published schedule and are indexed to CPI each 1 July, so any fee quoted without a schedule year should be treated as stale — including the FY2025-26 figures still circulating widely, which were superseded on 1 July 2026. The figures below are Schedule of Fees version 8, effective 1 July 2026.

Two structural points matter more than any individual number. First, the established-dwelling fee is roughly three times the new-dwelling fee at the $1 million band. Second, the established-dwelling scale then rises about twice as steeply above $1 million, so the multiple widens as the price goes up — at $5 million the established fee is three times the new-dwelling fee in absolute terms and a far larger share of the transaction.

Victorian Foreign Purchaser Additional Duty: 8% since 1 July 2019

Victoria charges Foreign Purchaser Additional Duty of 8% of the dutiable value on a foreign purchaser's acquisition of residential property, for contracts entered on or after 1 July 2019. It was 7% for contracts from 1 July 2016 and 3% for contracts from 1 July 2015. FPAD is additional to ordinary land transfer duty, not a substitute for it.

Ordinary land transfer duty on a non-principal-place-of-residence purchase, for contracts entered on or after 1 July 2021, is charged on this scale:

The annual holding costs: absentee owner surcharge and VRLT

Acquisition cost is the visible number. The annual cost is the one that changes a hold decision.

Absentee owner surcharge. Victoria charges an additional 4% of taxable land value on land held by absentee owners, applying from the 2024 land tax year. It was 2% for the 2020 to 2023 land tax years, 1.5% for 2017 to 2019 and 0.5% in 2016. It is charged on top of ordinary land tax, which is itself assessed on the aggregated site value of all your taxable Victorian land as at 31 December.

Vacant Residential Land Tax. VRLT applies to residential land left vacant for more than six months in the preceding calendar year, and it has applied state-wide across Victoria since 1 January 2025 — before that it applied only to a list of inner and middle Melbourne council areas. It is charged on capital improved value, not site value: 1% in the first liable year, 2% in the second consecutive year and 3% from the third. It applies regardless of the owner's residency.

Two categories sit outside that escalating scale and stay at a flat 1% indefinitely: land in metropolitan Melbourne that has been undeveloped for five or more continuous years, and new residential land that has remained unsold or unused for more than three years. If you are holding land rather than a dwelling, that is the rate that applies to you.

For an offshore owner these two interact in a way that is easy to underestimate. A property held vacant because managing a tenancy from overseas seems difficult can attract the absentee surcharge and VRLT simultaneously, and VRLT escalates each year it stays empty. On a $900,000 capital improved value, VRLT alone is $9,000 in the first liable year, $18,000 in the second and $27,000 from the third. The tax is designed to make leaving a dwelling empty more expensive than letting it.

The Commonwealth annual vacancy fee — the cost most often left out

The Victorian taxes above are the state layer. There is a separate Commonwealth layer that applies to foreign owners in every state, and it is the charge most commonly missing from a foreign-buyer cost estimate.

A foreign person who owns a residential dwelling in Australia is liable for an annual vacancy fee where the dwelling was not residentially occupied, and not genuinely available on the rental market, for at least 183 days in a vacancy year. A vacancy fee return must be lodged through Online services for foreign investors within 30 days of the end of every vacancy year, whether or not a fee turns out to be payable — and failing to lodge on time can itself make the fee payable.

For vacancy years starting on or after 9 April 2024, the vacancy fee is double the foreign investment application fee paid on that property. That is what makes it large: the fee scales with the property, not with a flat rate. On the $800,000 new apartment used in the worked example above, the application fee under the schedule in force from 1 July 2026 is $15,600, so a vacancy year would produce a vacancy fee of $31,200. That is arithmetic on the published rule, not a quote.

One further point that catches people: where an established dwelling was approved as a principal place of residence, it cannot be rented or leased at all. It has to be genuinely occupied by the foreign owner or their family. Letting it out is not a way to avoid the vacancy fee on that category of dwelling.

The off-the-plan duty concession — available to foreign buyers, with one catch

Victoria's temporary off-the-plan duty concession deducts the value of construction and refurbishment work carried out after the contract date from the dutiable value. Unlike the previous version of the concession it is available to all purchasers — including investors, companies and trusts — and there is no price threshold. It applies to contracts entered on or after 21 October 2024 and before 21 April 2027, a window that has been extended twice.

The catch, and it is a significant one for a foreign buyer: the concession reduces the dutiable value used to calculate ordinary land transfer duty. Foreign Purchaser Additional Duty is still calculated on the un-reduced contract price. So on an off-the-plan purchase the concession does less for a foreign buyer, proportionally, than it does for a domestic one — the 8% surcharge is untouched by it.

Capital gains tax and foreign residents

Foreign residents face restrictions on capital gains tax treatment that Australian residents do not, and the two that matter for residential property are the general 50% CGT discount and the main residence exemption.

The CGT discount. The 50% discount for individuals requires the asset to have been owned for at least twelve months. For foreign and temporary residents the discount was removed for discount capital gains accrued after 8 May 2012. The important nuance, and the one most summaries get wrong, is that this is an apportionment rather than a blanket denial: gains accrued before 8 May 2012 keep the discount, and a market-value election is available. It is only where an asset was acquired after 8 May 2012 by someone who was a foreign resident throughout that the discount percentage is zero.

Two citation points, because they are routinely got wrong. The 8 May 2012 date is in the statute itself — it sits in sections 115-105, 115-110, 115-115 and 115-120 of the Income Tax Assessment Act 1997, which is where the apportionment machinery lives. And the change was enacted by Act No. 124 of 2013, the Tax Laws Amendment (2013 Measures No. 2) Act 2013 — not by the 2019 housing affordability Act, which is what most secondary summaries attribute it to. The 2019 Act dealt with the main residence exemption, a separate limb described next.

The main residence exemption. The provision is section 118-110 of the Income Tax Assessment Act 1997, and its heading is "Basic case" — not "Main residence exemption", which is how it is usually cited. The exemption does not apply if, at the time the CGT event happens, the individual who owns the dwelling is an excluded foreign resident. There is a life-events exception, available where the period of foreign residency is six years or less; the four qualifying life events are set out in section 118-110(3) to (5). Because the test is applied at the moment of the CGT event, a person can occupy a dwelling as their main residence for a decade and lose the exemption entirely by being a foreign resident on the day they sell.

There is also a transitional cut-off, and it is not where people look for it. It is in a different Act: section 118-110 of the Income Tax (Transitional Provisions) Act 1997, inserted by item 32 of Schedule 1 Part 1 to the Treasury Laws Amendment (Reducing Pressure on Housing Affordability Measures) Act 2019. That is the provision carrying the 30 June 2020 transitional cut-off. The window has closed, so for a disposal today the current rule applies without transitional relief — but if you are reading an older summary that refers to a transitional, this is what it is describing, and it is not a free-standing application item in the amending Act.

This is squarely a question for a registered tax agent with cross-border experience, and it should be asked before purchase rather than before sale — residency during the holding period and residency at disposal are what drive it, and by the time you are selling that history is fixed.

Is another state cheaper?

Every state and territory charges its own foreign purchaser surcharge and its own absentee or foreign owner land tax surcharge, at different rates and on different bases. Victoria's foreign purchaser duty is 8% and its absentee owner land tax surcharge is 4%. Queensland charges Additional Foreign Acquirer Duty of 8% for liability arising on or after 1 July 2024, and a foreign or absentee land tax surcharge of 3% on taxable value above $350,000.

Comparing them properly means comparing total cost over an intended holding period — acquisition duty plus annual land tax plus any vacancy exposure — rather than comparing headline surcharge rates. And the Commonwealth layer, the ban and the application fee, is identical wherever you buy. Check the relevant state revenue office for current figures rather than relying on a comparison table in an article.

What this means in practice for a Chinese-speaking buyer in Melbourne

The ban has changed which properties are worth looking at rather than whether it is worth looking. For a foreign person, the searchable universe in Melbourne is now new apartments, house-and-land packages, off-the-plan stock and vacant residential land — and each of those markets has characteristics the established-house market does not.

New apartment stock carries developer margin, and resale into a market where the next buyer may be a domestic owner-occupier rather than another foreign investor is the risk that most often surprises people. Off-the-plan carries settlement risk, valuation risk at completion and a construction timeline. House-and-land moves the buyer to the growth corridors, where land content is higher and the arithmetic is different again.

Our own transaction record is domestic and Victorian, and we are not going to present it as evidence about what a foreign buyer should do — the constraint set is different enough that the comparison would be misleading. What we can say is that the acquisition-stage government charge on an approved foreign purchase is large, the annual holding surcharges are recurring, and both belong in the feasibility from the first conversation. That record — 345 anonymised transactions, published open-access with a citable DOI — is below, so you can see exactly what it does and does not cover.