Seeking local legal representation is paramount when purchasing property in Australia.
Understanding of local standards for legal advice on things like site acquisition and lease agreements is essential.
Regulations on town planning and development are becoming more and more complex and local legal services are the right way to go to avoid common mistakes made by foreigners.
Here are the top 5 tips for buying property in Australia:
1. You are not limited to a new property from a developer
You don’t have to buy new off the plan, there are ways you can acquire established residential property.
Further there is an entirely different set of rules when it comes to purchasing land, commercial or agricultural property, which can make it easier for foreign investors.
2. Buy under a trust or corporate structure if possible
Changing taxation legislation means in some circumstances it may be advantageous to acquire a property title through a trust or company structure.
3. Negative gearing beats positive gearing
This of course depends on you goals and your personal financial situation, but be aware the Australian government charges comparatively higher rates of income tax to non-residents, while on other the other hand it makes losses of expenses claimable against income tax.
Most foreign investors of residential property prefer negative or neutrally geared property for these reasons.
4. Get a 50% capital gains discount
This is usually only available to Australian residents who hold a property for more than one year. However in some situations you can get around this by purchasing the property through a trust or company held buy an Australian resident. Talk to your tax advisors.
5. Use a buyer’s agent
A buyer’s agent often has a better understanding of the market than foreign investors. They have a wide network of contacts and are better equipped to negotiate with Australian vendors. They usually charge a 3% fee on sale price but can save you a lot of time putting together a short list to match your desires.
To ensure you do not get ripped off it is a good idea to establish a capped fee agreement to deter an agent from bidding higher on a property than what it is worth.
6. Get advice on financing and purchase costs
If you have a lot of spare cash for a larger down payment it is probably better to obtain a mortgage from a bank from your own country because you will more than likely have access to lower interest rates. If you do use an Australian bank they will often need a 30% deposit and sometimes require other cash injections due to foreign currency exposure. Visit this page for further information regarding land property information
Be aware that Australian bank branches in other countries often do not provide the best deals that are available in Australia.
Talk to your lawyer about stamp duty and other purchasing costs unique to Australia as this can really impact your bottom line.