Suppose you are a temporary resident in Australia and want to purchase a Principal Place of Residence (PPR). In that case, there are restrictions and requirements you must follow, mainly governed by the Foreign Investment Review Board (FIRB). Here’s what you need to know:

Key Restrictions & Requirements:

1. FIRB Approval is Required
   • Temporary residents must apply to the Foreign Investment Review Board (FIRB) for approval before purchasing a property.
   • FIRB applications usually get approved if the property is for personal use (i.e., your primary residence).
2. Type of Property Allowed
   • You can buy only a new dwelling or vacant land to build a new home.
   • If purchasing an established (existing) dwelling, you must live in it and cannot rent it out (except in specific circumstances).
   • You must sell the property once you leave Australia (if your visa expires and you don’t become a permanent resident).
3. Who Qualifies as a Temporary Resident?
   You are considered a temporary resident if you:
   • Hold a valid temporary visa (e.g., student visa, temporary work visa, bridging visa).
   • Have at least 12 months remaining on your visa.
   • Do not hold Australian citizenship or permanent residency.
4. Additional Fees & Taxes
   • You must pay a FIRB application fee, which varies based on the property’s value.
   • Some states impose an additional foreign buyer surcharge on stamp duty (e.g., NSW, VIC, QLD).
5. Restrictions on Renting Out
   • If you buy an established dwelling, you cannot rent it or use it as an investment property.
   • However, you may rent a room while living in the property.
6. Exemptions for Spouses of Australian Citizens or PRs
   • If you are a temporary resident married to an Australian citizen or permanent resident, you do not need FIRB approval for a joint purchase.

As a temporary resident looking to purchase a Principal Place of Residence (PPR) in Australia, it’s essential to be aware of the associated fees and potential exemptions:

Foreign Investment Review Board (FIRB) Application Fees:

When applying for FIRB approval to purchase residential property, fees are determined based on the property’s value. As of April 2024, the Australian government increased these fees, especially for established dwellings, to encourage investment in new housing stock. Here’s a breakdown:

• For properties valued at $1 million or less: The FIRB application fee is $42,300.
• For properties valued over $1 million up to $2 million: The fee increases to $84,600.
• For properties valued over $2 million: The fees continue to escalate with the property’s value.

These fees are payable upon application and are non-refundable, even if the application is unsuccessful.

herbertsmithfreehills.com

State-Based Foreign Buyer Stamp Duty Surcharges:

In addition to FIRB fees, several Australian states impose a Foreign Buyer Stamp Duty Surcharge on residential property purchases by foreign persons, including temporary residents. The surcharge rates and regulations vary by state. Here’s an overview:

• New South Wales (NSW): Foreign purchasers of residential property are subject to an additional 8% surcharge.
  pwc.com.au
• Victoria (VIC): Foreign purchasers face a surcharge of 9% on residential property acquisitions.
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• Queensland (QLD): An 8% surcharge is levied on foreign residential property buyers.
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• South Australia (SA): A 7% surcharge applies to foreign purchasers.
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• Western Australia (WA): Foreign buyers are subject to a 7% surcharge.
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• Tasmania (TAS): A 3% surcharge is imposed on foreign purchasers.
  pwc.com.au

Please note that Queensland imposes an 8% surcharge on foreign purchasers of residential property.

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Exemptions and Concessions:

Certain exemptions or concessions may apply, particularly for temporary residents purchasing property with an Australian citizen or permanent

In Queensland, when a property is jointly purchased by a couple where one partner is an Australian permanent resident, and the other is a temporary resident, the Additional Foreign Acquirer Duty (AFAD)—an extra stamp duty surcharge—may still apply to the temporary resident’s share of the property.

Key Points:

1. AFAD Applicability:
   • AFAD is an additional duty levied at 7% of the property’s dutiable value for transactions dated 1 July 2018 and 30 June 2024 and 8% for transactions on or after 1 July 2024.
     qro.qld.gov.au
   • This duty applies to foreign acquirers, which includes individuals who are not Australian citizens or permanent residents.
2. Joint Purchases:
   • If a property is purchased jointly by a permanent resident and a temporary resident, AFAD is typically applied only to the portion of the property acquired by the temporary resident.
     qro.qld.gov.au
3. Exemptions:
   • Specified foreign retirees holding certain visas are exempt from AFAD, but this does not generally apply to temporary residents.
     qro.qld.gov.au
   • Unlike some other Australian states, Queensland does not offer a general exemption from AFAD for foreign purchasers buying a principal place of residence jointly with a spouse who is an Australian citizen or permanent resident.
     northadvisory.com.au

Example Scenario:

Consider a couple purchasing a home in Queensland for $800,000; one partner is an Australian permanent resident, and the other is a temporary resident.

• Transfer Duty (Home Concession): The standard transfer duty would be $21,850 after applying the home concession.
• AFAD Calculation: AFAD would apply to the temporary resident’s 50% share:
  • $800,000 × 50% = $400,000
  • AFAD at 7% (assuming the transaction occurs before 1 July 2024):
    • $400,000 × 7% = $28,000
• Total Duties Payable: $21,850 (transfer duty) + $28,000 (AFAD) = $49,850

For more detailed information, refer to the Queensland Revenue Office’s guidelines on assessing and calculating AFAD.

Given the complexities involved, it’s advisable to consult the Queensland Revenue Office to understand your situation’s specific implications.

If you are a temporary resident in Australia and need tax advice, please get in touch with us.