How To Invest In Property In Australia

How To Invest In Property In Australia

Ah yes! We all love the great Australian dream of home ownership. We look at the how Aussies abroad can achieve this dream. There’s a certain sense of security in owning your own home, I think Darryl Kerrigan from the movie The Castle said it best

“It’s not a house it’s a home, a man’s home is his castle”.

So, if you have decided to make the leap into home ownership then there are a few things to consider because your are special. Yes, your are an Australian living overseas so your are a bit special. I mean there are special considerations to take before buying whilst overseas. So, Ozzies Abroad have done a bit of investigating and come up with the main things on how to invest in property in Australia.

Ozzies Abroad looks at buying a property in Australia whilst living abroad.

Why Buy?

Firstly, why are your buying a property? It may or may not be the prudent decision at the moment with property prices historically high. What goes up must come down…..maybe! Truth is nobody really knows but property does have an outstanding track record when it comes to investment.

Can I Borrow Money In Australia?

The short answer is yes but there has been a few changes. In 2016, the Australian Prudential and Regulatory Authority (APRA) stamped down on banks lending criteria to non residents of Australia.

How To Invest In Property In Australia

This also includes Australians living overseas and earning most of their income abroad. The criteria change involves more documentation, a higher deposit, Australian tax brackets applied to your foreign income and any rental income from a foreign property not included in loan assessment.

So, it’s a bit tougher but still possible. Different banks have different criteria depending on which currency your earn, whether your are self-employed or salaried, an Australian citizen or foreign citizen. The best thing to do is talk to a mortgage broker about expat loans. A Mortgage broker can help your in establishing your borrowing capacity and also help your get a pre-approved loan. You will also need to transfer your saved up deposit back to Australia and you don’t want to lose money on the transfer process.

Naritas Finance can help you source an expat loan by comparing banks and exploring your options.

Will I Pay Tax On Property?

The short answer is yes because there have been a few changes. With regard to tax you need to know if your are an Australian resident for tax purposes. You can be an expat living overseas and still be an Australian resident for tax purposes. Basically, if your are an Australian resident for tax purposes you will generally be taxed by the Australian government on your worldwide income from all sources. Non-residents or foreign residents for tax purposes will only be taxed by the Australian government on their Australian income.

How To Invest In Property In Australia

Now, in regard to property there is a Capital Gains Tax (CGT). Any growth in the value of your property is subject to capital gains tax, payable on the sale of the investment.

If your are an Australian resident for tax purposes and held the property for more than 12 months, then your can get a 50% capital gains tax discount when your sell the property. However, since July 2017 that tax has gone up from 10% to 12.5%.

If your are a non-residents for Australian tax purposes, then your lose the 50% capital gains tax discount for any capital gain made during the period your are a non-resident. It used to apply to any property worth over 2 million but since July 2017 it applies to all properties worth over $750,000.

Click this link here for helpful information from the Australian Taxation Office.

What is Negative Gearing?

Negative gearing is when you borrow money to buy your property and the cost of owning property is more than the income from the property. Basically, it costs money to own a property and these costs are the interest on mortgage, body corporate fees, council fees, letting agent fees, insurance, council rates and a new lick of paint now and then. You also receive money in the form of rent paid by the tenant. Now, if the costs are more than the rent, than your property is negatively geared because your need to fork out a bit of extra money each month to meet expenses.

How To Invest In Property In Australia

The good news is that your can deduct your losses from your tax, this also includes any depreciation of fittings. If you’re an Australian resident for tax purposes you can deduct your losses against other sources of income. As a result, you can reduce your overall taxable income and annual tax liability. If you’re a non-resident for Australian tax purposes and your don’t have any other income in Australia then your can deduct these losses against future tax after your come back to Australia.

How Do I Find A Property?

Once your know where you want to buy then the best thing to go online and start researching. It can be a bit difficult while overseas because you can’t do open house inspections, hard to make offers, negotiate and you might miss out on some listings that aren’t advertised. Many Expats have a family member or friend that can do some of the running around for them but many don’t. If this is the case then your might consider hiring a buyer’s agent, they can do all the running around for your and in many cases they can save you money too.

How To Invest In Property In Australia

There You Have It

We hope this article was informative and helpful in how to invest in property in Australia and we wish your success in your property purchase. As usual, we like to get comments so get vocal down below. If your have any questions please let me know. Just a bit of a disclaimer, I’m not giving financial advice nor do I propose to. This is for information purposes only.

See Ya!

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8 Replies to “How To Invest In Property In Australia”

  1. This article is very informative! I never realised how much of a chore the ozzie tax law was for income streams from foreign countries.
    All in all this article has kinda cemented in my mind that Getting properties in Australia when you live abroad is gonna be one hell of a chore but if you do invest, it could become a nice extra bit of income.

  2. Good afternoon,

    I must say your article comes in very handy.
    I was born in Australia but at the age of 3 years old my Dutch parents took me to Europe. I have not been back to my birth country yet but hopefully, it will happen in a few years.
    I have always taken care to keep my Australian passport so getting into the country should not be a problem. I have been playing with the idea that perhaps the last years of my life I might like to live in Australia so getting your information on buying property is very helpful. Thank you.

    Regards, Taetske

  3. My grandparents passed last year, but they left a lot of money to me (being the only grandchild). I’m super thankful, but I’m only 24 years old – still figuring life out, off and on living at home…. everyone keeps telling me I should invest it somehow. I’ve always loved to travel abroad – so I was considering investing it into some property abroad.

    But all of this stuff is way over my head!! Yikes. Australia would be so cool though! I have some friends there, too. I think part of me is just too lazy to figure all of this out … I’m not sure what to do with the money. I’ve been happy working and saving and travelling when I can …. but I’m just not sure how to handle this investing stuff. But thank you for this information! 🙂

    1. My advise is don’t waste the money Mei. If you want to invest in OZ, then I suggest going Down Under and visiting for a while. If need some help let me know, I can introduce you to some good buyers agents. Hope this helps and if you want to learn more about transferring money to and from Australia then Read Here.

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