tarset

I'm in Australia looking for a business and also for a residence. Can anyone tell me what I'm allowed to buy within the FIRB framework. Can I buy old or new property, can I buy more than one.

shorrock

Hi

Check out www.firb.gov.au this site will tell you what you can and can't do.

Kieron

Herman

I looked into this as I'm on a 457. The rule seems to be:

You can buy a new or old residence as your home and live in it.

If you want to buy investment property the FIRB rules kick in. You can buy a new residence as long as its part of a block in which a certain percentage is not already owned by foreigners (forget the exact figure, I think 10%).

You are allowed to develop land as a foreigner for own use or investment purposes. So you can buy a plot of land and get a house (or more than one) built on it and then rent it out. Quite a good solution in places like Perth and Brisbane if you want to own an investment property other than a new apartment in a block subject the above percentage rule. I looked into this in Brisbane - beware though, lots of cowboys out there selling low quality blocks on subdivided land with shoddy house build quality. Some promise the earth but the reality ends up a house built within inches of another house (one of colleagues here got burnt by this). Always check exactly where on the plot planning permission has been granted.

My situation is unusual as I get paid an agreed net salary so for me it proved uneconomic to buy an investment property that would be negatively geared and in any case I discovered my temporary employment contract forbade me from buying a property as it would cost my firm the living away from home allowance which it gets the benefit of. Its a bit complicated in my case but essentially any offset of excess interest against my salary would reduce my income tax, but since I get an agreed net income it would merely benefit my employer. However, if you have a normal 457 visa you should be able to benefit from negative gearing offset if required (not sure if you know about this but in Australia if you buy an investment property using borrowed money and the interest on the loan exceeds the rent you receive, you can use the excess interest to set off against your top slice of employment income so that your 'losses' are reduced by 48% if thats your top rate of income tax. What this means is that the government effectively funds 48% of the interest not covered by rent, not a bad scheme and designed to encourage property investment).

DawnieB

We have just purchased an "old" house with FIRB approval, even with only 8 months left on the 457 - I did need a letter from my employer stating that they intend to get another sponsorship after this one expires.

This was much easier that both the bank and the estate agent thought it would be. Don't let them talk you into long settlement periods!! We followed all the rules - not many - and the approval was back within the week.

Purchasing here is somewhat different to the UK but probably overall easier.

one suggestion though
Make sure you have 20 % deposit , it avoids the necessity for mortgage insurance, which we were advised would be difficult on a short tem visa.

Jaj

On Wed, 16 Oct 2002 01:32:34 +0000, Herman
wrote:

    >Originally posted by tarset:
    >> I'm in Australia looking for a business and also for a residence. Can
    >> anyone tell me what I'm allowed to buy within the FIRB framework. Can
    >> I buy old or new property, can I buy more than one.
    >I looked into this as I'm on a 457. The rule seems to be:
    >You can buy a new or old residence as your home and live in it.

Although you are I think expected to sell when leaving Australia, or
you might need to do so anyhow - but it could be awkward if you had to
sell into a falling market.


    > However, if you have a
    > normal 457 visa you should be able to benefit from negative gearing
    > offset if required (not sure if you know about this but in Australia if
    > you buy an investment property using borrowed money and the interest on
    > the loan exceeds the rent you receive, you can use the excess interest
    > to set off against your top slice of employment income so that your
    > 'losses' are reduced by 48% if thats your top rate of income tax. What
    > this means is that the government effectively funds 48% of the interest
    > not covered by rent, not a bad scheme and designed to encourage property
    > investment).

But a lot of the benefit has already been capitalised in the purchase
price you pay, and negative gearing is a great way to lose tons of
money if the property market goes through a downturn.

Jeremy