Hi all,
I am hoping to get more info and your thoughts about my situation.
I am a 30 years old female from the Netherlands, I'm in Australia for a year now and just received a 457 long term business sponsorship Visa. I am planning to stay here for a long while, maybe even permanently? Just fell in love with this country. It's also this country who made me consider property investing, it seems that almost everybody does it!
I think I would be good at it, I have a business mind and can reach goals if I really want to. I have savings, I can pay a first deposit.
What I would like to know from you:
Can I invest in property in Australia as a non resident?
Is it better to wait 2 years when I become a permanent resident?
When I am a permanent resident, should I buy my own home first, so I am entitled to the First Home Buyers Grant?
Thanks a lot for your anwers, I am a bit puzzled at the moment and try to find the right thing to do.
Barbara Sijbesma
Hi Barbara
The Foreign Investment Review Board (FIRB) will probably allow you to buy a principal place of residence (PPOR) based on your 457 visa. See:
http://www.pelicanwaters.com/images/FIRBinformationguide.pdf
in the Second Hand Dwellings section.My opinion; I would buy now.
Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
Hi Barbara
Firstly welcome to the forum and I hope you enjoy your time both here in australia and i our property investing community.
Whilst the FIRB will determine your application bear in mind that you will be unable to borrow more than 80% of the purchase price or valuation as a non resident.
Your mortgage broker should be able to assist you in making a few recommendations as many lenders will not accept applications from NR's.
Richard Taylor | Australia's leading private lender
Welcome to the site and OZ.
You may want to compare the rise in property over the next 2 years against the FHOG.
Is it worth the wait? How much will you spend on rent in the meanwhile?
You can apply for exemptions from certain foreign investments rulings.
Barbara, there is no issue buying property as a non resident. We're non resident investors and since 2004 we have built up a portfolio of 10 properties (whilst living overseas but migrating in the next couple of years).
Some things to keep in mind:
– your purchases will be regulated by the Foreign Investment Review Board (http://www.FIRB.gov.au) and it basically says that as a non resident you can only buy new not previously owned, not previously tenanted properties (houses and units) or you can buy land but then have to build on it (and add a minimum value) or you can buy a existing house but then again you have to add value or increase the number of dwellings.
– however if you are a 457 visa holder I think Paul was right in that the FIRB will allow you to buy your own home, but then the interest is not tax deductible
– as Richard says your maximum LVR will be 80% as a non resident, once you are a permanent resident you have access to higher LVRs (if you want that)
– if you intend to settle in AU longer term and want to buid a significant property portfolio, think about your holding structure. We initially bought in our own names (didn't know any better) but are now using different structures. Structures is something you need to discuss with a solicitor and accountant as each individual situation needs to be assessed carefully. You can setup a structure with a company acting as the trustee of a trust and in that case you can avoid FIRB limitations, but I would say that is not something you'd want to do just yet.My recommendation?
First read some books, like Steve McKnight (0-130 properties in 3.5 yrs) and Michael Yardney (How to grow a multimillion property portfolio in you spare time). Together I think these would give good insights in property investing and the key approaches, i.e. cashflow positive, negatively geared growth property, adding value etc.
Do some research on key growth areas, lots available on the web. Sometimes it is worth paying money for good research!
Don't wait 2 yrs – if you have the money buy your first investment property. If you wait 2 yrs you have lost the opportunity of 2 yrs of growth and even with a conservative growth of 7% over say $400,000 you're talking about close to $60k… that is money you could then use to fund a next investment…
Good Luck!
Erik
hi, share my experience with you. i was a non resident but i had PR status. could have qualified for FHOG but didn't take it up as i bought a better house than that'd have allowed.
i was taxed from the 1st $ earned & quickly realised that paying 40% tax on rental income was REAL stupid. Bought house 2 just to ensure that I had zero income.
if you have enough income elsewhere to live on as I did, I'd go for maximum gearing. Then when you come to live here permanently & you have other income here, all the 'losses' you have carried forward can be offset against the tax you have to pay in future.
My strategy if it could be called that [ i just mainly blundered along & found the mother lode], is to DEFER whatever payments I could. if i don't have to pay today, i'll worry about the payment when it's due.
And before any hotshot do the same, I'll remind everyone that it works only if you can pay up when it's due. One year, I paid tens of thousands in tax but I had already factored that into my cashflow.
there's no such thing as the perfect investment.
good luck,
KYErikH wrote:Barbara, there is no issue buying property as a non resident. We're non resident investors and since 2004 we have built up a portfolio of 10 properties (whilst living overseas but migrating in the next couple of years).
Some things to keep in mind:
– your purchases will be regulated by the Foreign Investment Review Board (http://www.FIRB.gov.au) and it basically says that as a non resident you can only buy new not previously owned, not previously tenanted properties (houses and units) or you can buy land but then have to build on it (and add a minimum value) or you can buy a existing house but then again you have to add value or increase the number of dwellings.
– however if you are a 457 visa holder I think Paul was right in that the FIRB will allow you to buy your own home, but then the interest is not tax deductible
– as Richard says your maximum LVR will be 80% as a non resident, once you are a permanent resident you have access to higher LVRs (if you want that)
– if you intend to settle in AU longer term and want to buid a significant property portfolio, think about your holding structure. We initially bought in our own names (didn't know any better) but are now using different structures. Structures is something you need to discuss with a solicitor and accountant as each individual situation needs to be assessed carefully. You can setup a structure with a company acting as the trustee of a trust and in that case you can avoid FIRB limitations, but I would say that is not something you'd want to do just yet.My recommendation?
First read some books, like Steve McKnight (0-130 properties in 3.5 yrs) and Michael Yardney (How to grow a multimillion property portfolio in you spare time). Together I think these would give good insights in property investing and the key approaches, i.e. cashflow positive, negatively geared growth property, adding value etc.
Do some research on key growth areas, lots available on the web. Sometimes it is worth paying money for good research!
Don't wait 2 yrs – if you have the money buy your first investment property. If you wait 2 yrs you have lost the opportunity of 2 yrs of growth and even with a conservative growth of 7% over say $400,000 you're talking about close to $60k… that is money you could then use to fund a next investment…
Good Luck!
Erik
Hi Erik,
My situation is similar to Barbara's. Me and my husband have been in Australia now for nearly 1 1/2 years on our 457 visa. We love this country and will definately apply for our permanent residency in the next couple of months. We have some funds saved up and am thinking of investing in properties.Are you saying that if set up a structure with a company acting as a trustee, we will be able to purcase properties for investment purposes?
Thanks,
EKEK,
Best to check with a solicitor but as far as I understand with your 457 visa you can
– buy your on house to live in
– buy new units or houses for investment that have not been pre-owned or lived in (the usual FIRB regulations)My solicitor has explained to me that if I set up an Australian company and the company buys as trustee of a trust then we are not limited to the FIRB restrictions. Living overseas makes setting up an Australian company a bit more difficult as you need at least one resident Australian director but that can be solved and in your case shouldn’t be an issue.
Regards,
Hate to disagree but this is not the case
Are you saying that if set up a structure with a company acting as a trustee, we will be able to purcase properties for investment purposes?
Richard Taylor | Australia's leading private lender
Richard – please do disagree if I'm wrong!
But would appreciate to hear some more of your thoughts on this then.
The way my solicitor explained, when we setup an Australian company which buys as trustee of an Australian trust the FIRB will not need to give approval. It does mean that the business needs to have an Australian resident director.
Erik
That is the big difference. You cannot have a Australia Company without a Australian resident Director.
If you have 1 of these then all is fine.
Not too many people hanging around willing to be a Director of someone elses Company.
Other than that all is good.
Richard Taylor | Australia's leading private lender
Hi Richard,
You are talking about an Australian resident. I live, work and pay tax permanently in Australia but I'm here on a temp. Visa.
Does this mean I can start my own trust and be the director of that trust?
Thanks,
BarbaraHi Barbara
Yes as long as you satisy the conditions to become eligible to be a Company Director you can purchase in Trust.
Have done numorous deals for clients like this.
Just a little more expensive to set up of course but other than that all is ok.
Richard Taylor | Australia's leading private lender
hi guys , can someone please correct me if im wrong!!
my understanding is that a foreign person cannot be a sole director of a company even if they are resident in australia, so to have a company as trustee you need a perm resident or aussie citizen to be a director.
from what i have read from the firb website,
A foreign person relating to company's is
"
- a corporation in which 2 or more persons, each of whom is either a natural person not ordinarily resident in Australia or a foreign corporation, hold an aggregate controlling interest (that is, a total holding of 40 percent or more);
- the trustee of a trust estate in which a natural person not ordinarily resident in Australia or a foreign corporation holds a substantial interest; or
- the trustee of a trust estate in which 2 or more persons, each of whom is either a natural person not ordinarily resident in Australia or a foreign corporation, hold an aggregate substantial interest. "
with a substantial interest being defined as
"
A substantial foreign interest (ie, a controlling interest) occurs when a single foreigner (and any associates) has 15 per cent or more of the ownership or several foreigners (and any associates) have 40 per cent or more in aggregate of the ownership of any corporation, business or trust."
Does this mean that shares in the trustee company cannot be greater than 15% for a singal foreign person or 40% in total from foreigners otherwise it would be classed as substantial foriegn interest?
Are directors classed as having a controlling interest? if so the same % would apply would it not?
i also note that the firb aplication form for trusts/company's ask for the shareholders and benificeries, does this mean that the benificieries have to be a mix of both foriegn and non foreign?
thanks for the help
regards
pete
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