A common question that always comes up with many kiwis is can New Zealanders buy property in Australia, because many kiwis from New Zealand look to purchase an investment property, or buy a new home in Australia. The options available differ slightly between NZ citizens living in Australia, NZ citizens living in NZ and permanent residents of New Zealand (NZ).
So can New Zealanders buy property in Australia
There is a lot of confusion around can New Zealanders buy property in Australia and in this page we are going to give you all the answers that you need to know about kiwis buying property in Australia. So can New Zealanders buy property in Australia
Yes you can purchase a home or investment property in Australia if you are a New Zealand citizen living in New Zealand or Australia. A New Zealand citizen can purchase an existing property or a brand new build property in Australia.
But there is a little more to it including how much stamp duty you have to pay and can you gain finance in Australia or New Zealand, so lets go through the details.
New Zealand citizens living in Australia are treated in the same way as Australian permanent residents. Therefore, the banks and lenders will be the same, and the application process is fairly similar.
This is because a citizen of New Zealand is able to obtain a Special Category Visa (SCV), giving you the same borrowing rights as a permanent resident of Australia.
NZ citizens living in Australia can therefore purchase any type of real estate they desire. This includes investment properties, and old or new homes to live in.
NZ citizens living in NZ and permanent residents of NZ, will be treated the same as any other foreign citizens in Australia
However, as holders of their SCV (Special Category Visa Subclass 444), citizens of New Zealand do not need to apply for FIRB approval.
Permanent New Zealand residents however will need to apply.
FIRB, or the Foreign Investment Review Board, is responsible for approving all foreign investment within Australia. So, put simply, if you are a NZ citizen living in NZ you can purchase a property in Australia.
The rules around foreign investment do not apply. There are many other government rules and regulations so please contact us to help you decide if you are eligible to purchase a property in Australia.
You do not need approval from FIRB (Foreign Investment Review Board) if you are a New Zealand citizen wanting to buy a residential property (home or investment property) in Australia. New Zealand citizens can buy property in Australia just like an Australian citizen does and there are no additional taxes to pay.
New Zealanders are eligible to borrow in Australia to purchase a either a home or investment property though it does depend on your situation, the lender and your borrowing capacity. See below for the different situations, please contact us where we can further help you.
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When purchasing an investment property in Australia you will need at least 20% deposit which will need to come from New Zealand. You can get this deposit from equity in your own home, other investment property or use cash. The other 80% you will borrow from an Australian lender. The banks and lenders in
Australia will complete the same process you use in New Zealand to purchase a property, including income and debt serviceability.
During this finance application process, you will need to use both an Australia broker and a New Zealand broker to put the deal together. We highly recommend you use brokers who have completed these types of transactions before as it needs to run smoothly otherwise it will cost you time and money.
At Key to Australia we have brokers in Australia and New Zealand who do these types of loans for all our Kiwi clients, contact us if you would like our help. Can New Zealanders buy property in Australia
Use a New Zealand broker to help you arrange your 20% deposit for you Australia investment property or home
Use an Australian broker to find the 80% required to complete the loan transaction.
Make sure both NZ and AUS brokers work together when you settle on the property
Currently as an Australian resident or citizen you must pay 3% of the purchase price of the property you are buying but if you are a foreign buyer you must pay 10%. However, if you purchase a land and build property you only pay either the 3% or 10% on the land price not the total purchase price.
Hence why at Key to Australia we save our clients thousands of dollars by helping them purchase investment property through land and build packages. Obviously, there are other benefits but this is a massive cost saving.
In 2016, the Australian Government introduced a stamp duty surcharge or FPAD (foreign purchase additional duty) for foreigners that want to buy property in Australia. When New Zealand citizens arrive in Australia, they are automatically granted a special visa known as a Special Category Visa (Subclass 444).
This visa may exempt you from having to pay the stamp duty surcharge which applies in New South Wales (NSW), Victoria (VIC), Queensland (QLD), Western Australia (WA), South Australia (SA), the Australian Capital Territory (ACT) and Tasmania (TAS), but be careful! In New South Wales, for instance, you need to be in the country for at least 200 days and at the time of contract exchange in order to avoid the stamp duty surcharge.
Can New Zealanders Buy Property in Australia:
We help our NZ clients purchase investment property by reducing their Stamp Duty (legally) from 10% to 3% in certain states. We will happily meet with you in your home or via SKYPE to have a chat to see whether it's something you would like to do.
Stamp Duty or as it is called land transfer duty, is the cost of transferring land from one individual or entity to another in Australia. Whether you are buying a home, holiday home an investment property or even in some states vacant land.
You must pay stamp duty within 30 days of settlement. It's a good idea to have an idea of how much stamp duty you need to pay before you purchase the property.
This is not a straight forward question to answer. At all depends on a number of variables. The biggest one being the state you purchase the property in. Then you need to take into account the purchase price and whether its your first home, second home or an investment property.
In October 2016, the Reserve Bank of New Zealand put a ‘speed limit’ on banks, which has reduced the number of loans they can approve for investors who have less than a 40% deposit.
This has now decreased to 35% (as of August 2019) of the purchase price on an investment property. For you to purchase an investment property in Australia requires just 20% deposit.
As a result, NZ property investors have increasingly turned to Australia because they can still buy a property with a small deposit, at a much lesser price than the major cities in NZ.
Less deposit required to purchase a brand new property in a capital growth area. 4 bed, 2 bath, 2 lounge, air-con and double garage. Brick.
Second hand property, costly to renovate and maintain, generally older properties weatherboard with lack of heating.
Just like New Zealand, Australia has many different types of options including residential, commercial, retail or industrial. Retail, commercial and industrial property investments require a greater amount of due diligence and when you are living in New Zealand, we would not recommend these types of investments unless you are a very experienced investor and have contacts here in Australia.
Residential property is far easier to understand than other types of property and there are not many different aspects when it comes to purchasing a property in Australia from New Zealand. It’s still bricks and mortar, buying in the right location and finding the right tenant.
Of course, the numbers have to work but again the same principles apply when doing your numbers in Australia as you would do so in New Zealand.
However right now the numbers are much better in Australia than they are in New Zealand.
If you’re looking to purchase a property in Australia you will need to decide if your intention is to buy a property and fix it up then rent out or buy a new build property to then rent out. Let's first discuss buying an existing property, renovating then renting out.
If you are going to buy an existing property to renovate then rent out we would highly recommend that you actually have the intention of living in Australia. Just like any renovation whether in your own country or not being onsite is extremely important when it comes to renovating. Costs can get out of control and finding the right trades people to do a great job becomes difficult.
If you already have a rental property in New Zealand don’t miss judge the fact that it’s the same easy process. Remember you are buying an investment property that’s in a different country with different ways of doing things including systems, processes, laws, taxes and of course Australians (kiwi banter). Trying to do it all yourself can be stressful that’s why we recommend land and build packages.
Building times in Australia are around 16 weeks, much faster than NZ and Australian building costs are around $1,200 to $1,400psm. Again much cheaper than NZ at over $3,000psm.
At Key to Australia we have a full turnkey service, so there are no hassles, we have all the contacts and specialists to make sure everything runs smoothly.
This is the most popular way for many kiwis either looking to invest in Australia or purchase a home. There are substantial tax savings through depreciation, less stamp duty to pay and the whole process is managed from the start to finish including a tenant moving in. Yes you won't even need to find a tenant, plus the property is managed from day one.
Therefore, building brand new would not only save you thousands of dollars but with the help of Key to Australia the whole process is taken care of for you at no extra cost. Whether you are looking to buy your first or tenth investment property, buying brand new outweighs buying existing properties.
Key to Australia has over 35 years of experience helping Kiwis.
""It was such an easy process to go through, Mark and the Key to Australia team explained the whole deal and how everything worked including tax and finance from New Zealand. The team at KTA were very knowledgeable and informative and at no stage did we feel locked in or pressured to buy.
A tenant moved in on day one and we have never had an issue, KTA manages the property and keeps us updated regularly."
“The process was so easy, their knowledge of the market is exceptional, and they walk you through everything. I received constant updates on the building of the property from just a dirt site to fully completed.
On the day it settled a tenant moved in and I’ve never missed a rental payment. They did what they said they would with no glamorous claims, I trust them, and I would highly recommend them. I received no preferential treatment, they treated me just like any other client of theirs”
“We have been happy from day one with our dealings with Key to Australia, they had shown us a few properties and advised us on what would be best for us to buy.
I felt very comfortable with their honesty, service and advice. Through them we have bought a really good investment and are considering buying another property from Key to Australia.
I would highly recommend them to anyone that's interested in buying an investment in Australia."
Buying a house and land package rather than an established dwelling saves you thousands of dollars on stamp duty. What creates this saving is all to do with the conveyance (transfer of title).
When you buy a block of land which already has a dwelling on it, you are charged stamp duty on the price of the land and the existing house. When you buy a vacant block of land and build a brand-new home on it you only have to pay stamp duty on the part that is transferred to you.
Below you will see the difference in the cost of Stamp Duty when you purchase a new build property versus an existing property in Queensland.
That’s a saving of circa $9,600 plus the costs associated with the loan of $9,600 @ 4% over 25 years, (please note this is an example only and there are other variables to consider, please contact us for further clarification).
Purchase an existing investment property in Queensland.
Total cost including land and building - $500,000
Total Stamp Duty to pay circa - $17,400
Purchase a land and new build investment property in Queensland.
Total cost including land and building - $500,000 (land $250,000, building $250,000)
Total Stamp Duty to pay circa - $7,800
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When investing in Australia it’s important to get the right tenant, because as I’m sure you would agree, one of the biggest concerns for property investors is, what if I don’t get a tenant and or what if the tenant is terrible and trashes the property or doesn’t pay the rent?
We highly recommend using a professional property manager to find a tenant and manage the property.
At Key to Australia we have a full rental management company called Key to Rentals and even if you don’t decide to use our services do not do it from New Zealand by yourself. Find a professional property manager that has a good track record.
Even though managing a property in Australia is similar to New Zealand, it’s more prudent to have a manager based in Australia close to your property who can handle situations as they arise quickly and efficiently.
Once you find the right property manager the next step is to sign a Form 6 which contractually binds them to manage your property at a set fee for a period of time (typically 6-12 months). The typical fee for property management is 8.5% of your annual rental income.
If you already have a rental property in Queensland, and having issues with your property manager contact our sister company Key to Rentals on +61 75574 1331. Or if you are looking to invest in property through Key to Australia, we provide a full turnkey investment property including property management.
If you purchase a property through Key to Australia and the land and build has come close to completion we advertise for a tenant, show them through the property, complete a background check and setup a tenancy agreement. So, from day one you will have a quality tenant paying you your rental income.
In Australia they have tenancy database which are privately owned which contain tenants rental history. This includes tenants who have violated the terms of their previous lease which could mean, the tenant didn’t pay rent, damaged the property or used their bond to pay for unpaid rent.
National Tenancy Database
Property managers pay to use these databases to check if potential tenants are listed, if they are then that potential tenant is never chosen for your property. This is a great service to use which is not available in the New Zealand rental market.
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Part of investing in property is the tax savings which can be substantial especially over time. Australia and New Zealand have similar tax savings for rental properties but recently New Zealand has got hit hard by the latest government tax changes.
In Australia you can claim rental losses against other income as well as building depreciation (this was removed in New Zealand in the 2010 Budget).
Of course, there are the standard tax deductions like, expenses, interest on loans etc. At the time of writing New Zealand has just commenced “ring-fencing” before ring-fencing you could offset rental property losses against other income. Instead the rental property losses will be “ring-fenced” and carried forward to future years. These losses can then only be offset against taxable income from rental properties.
Australia does not have ring-fencing however if you live in New Zealand as a tax resident any property you purchase in Australia will be subject to ring-fencing at time of writing.
Though do not fear, there are many other tax advantages and we will go through them.
Please note we are not giving tax advice this is general information, please seek tax advice from a qualified accountant. If you don't have one we can recommend one for you. It's important you have a tax expert based in New Zealand and Australia who understands both sides of the Tasman when it comes to rental properties owned in Australia.
Deducting expenses from assessable income reduces the amount of income tax payable by the investor. For investment property in Australia purchased by Kiwis, typical expenses include advertising fees, bank charges, borrowing expenses, capital works, rates, insurance, legal fees, management fees, travel and water charges (if any not paid by tenant). These expenses can only be deducted however if the property is rented or available for rent.
The income from the asset is taxable at the individual marginal rate. What makes property (in particularly brand-new property) extremely tax effective is the capital works deduction. Effectively the capital works undertaken to construct the house can be depreciated annually for a period of 25-40 years at a rate of 2.5% p.a. provided construction began after 17 July 1985 and the property is used for residential accommodation or to produce income.
For fixtures and fittings with a low value, a depreciation rate of 18.75% can be used to depreciate these over their shorter useful lives. To ensure that the asset is depreciated in complete detail it’s very important to provide your accountant with a depreciation schedule of the property. Depreciation schedules or reports outline the figures in detail for depreciation purposes and are typically carried out by a licensed quantity surveyor. At Key to Australia we supply our clients with the depreciation schedule for their property at no extra cost.
As a New Zealander purchasing investment property in Australia you will require an accountant in New Zealand and Australia to complete both country’s tax returns. Again, we make sure that it is easy and stress free for our clients by providing qualified accountants in both New Zealand and Australia who understand property tax law.
Learn how to purchase an Australian investment property today...
At Key to Australia we specialise in helping New Zealanders purchase investment property in Australia. We offer a turnkey service which enables you to purchase a land and build package with full service along the way at no extra cost to you.
Since 1985 Key to Australia has provided finance and investment strategies to help clients from New Zealand and Australia purchase a home or an investment property easily and effortlessly in Australia.
Our team offers superior market knowledge, property investment expertise and professional development connections to suit your investment strategy. Whether you are after high capital growth or cash flow opportunities we can help.
Our properties are built brand new and tenant ready to move in on day one. We provide a one-stop-shop service leaving you stress and hassle-free. Enabling you to feel comfortable especially when investing from New Zealand.
We provide all the necessary services to help you purchase an investment property in Australia even though you are a citizen of New Zealand. From land, build, completion, finance, tax and ongoing property management of your rental property.
"I first heard about KTA on the radio and felt comfortable at the time to look into what they were offering. I was attracted to investing in Australia because of the new builds not existing housing and the good yields.
It was such an easy process to go through, Mark and the team explained the whole deal and how everything worked including tax and finance from New Zealand. The team at KTA were very knowledgeable and informative and at no stage did we feel locked in or pressured to buy.
A tenant moved in on day one and we have never had an issue, KTA manages the property and keeps us updated regularly.
We highly recommend contacting KTA, the speed and quality of the build and property is outstanding."
Aaron and Sophie Keown
Christchurch, New Zealand
New Zealand television breakfast show presenter and journalist Duncan Garner wrote an article in Stuff.co.nz. He spoke about how New Zealanders are getting ripped off not only with food and petrol prices compared to Australia, but that he purchased an investment property in the Gold Coast through Key to Australia and only paid around $1,000 per sqm versus $3,000 per sqm in New Zealand.
You can read the full article here.
The below video is of Duncan Garner when he first came to the Gold Coast to see whether the above was true or not. He saw it was and ended up purchasing an investment property (which is the one in the article above).
Can New Zealanders buy property in Australia, of course they can, so contact us today to find out how you can profit from property in Australia.
We have consultants based in New Zealand and Australia to help you see if purchasing an investment property or home in Australia is right for you...