Australia is renowned for its robust property market, and many expats living abroad often wonder if they can tap into this market, especially when it comes to purchasing commercial properties. The short answer is yes—Australian expats can buy commercial real estate while living overseas. However, there are a few important considerations and steps that expats need to follow to make the process smooth and legally sound.

The Australian Property Market and Expats

Australia’s commercial property market is diverse, spanning office buildings, retail spaces, industrial properties, and mixed-use developments. For Australian expats, purchasing commercial property presents a lucrative investment opportunity. While the process of acquiring property in Australia is relatively straightforward, expats need to familiarize themselves with the nuances of buying property from overseas.

Key Considerations for Australian Expats Purchasing Commercial Property

1. Foreign Investment Review Board (FIRB) Approval

One of the first things expats should know is that foreign investment in Australian real estate is regulated by the Foreign Investment Review Board (FIRB). The FIRB requires foreign buyers, including Australian expats who are living overseas, to apply for approval before purchasing certain types of properties, including commercial real estate.

However, the rules for expats are slightly different from those for non-Australian citizens. As an Australian citizen, even if you’re living abroad, you are still generally permitted to purchase property without needing to seek FIRB approval, as long as you meet certain conditions. For example, if you plan to buy a property as an investment (not for your own use), FIRB approval is still required.

In contrast, non-citizen foreign buyers must always seek FIRB approval when purchasing commercial property in Australia, regardless of their place of residence.

2. Financing and Loan Availability

Securing financing while living overseas can be one of the more complicated aspects of buying commercial property as an expat. In Australia, many banks are willing to lend to expats, but they may have more stringent requirements compared to residents.

Expat investors may find it helpful to work with experiance expat finance brokers that have a strong presence with many Australia lenders. General rule; Lenders may request the following:

• A higher deposit (often around 30-40% of the property’s value).
• Understand of the of the current lease agreement for the commercial property
• Proof of stable income, such as from overseas employment or other assets.
• A clean credit history both in Australia and internationally.

Type of Commercial loans that Expat can obtain;

• Lease doc application; If the lease has ICR times of 1.5. Then the expat can buy the commercial propery just using the lease income and not using the personal income.
• Lease doc application is the easiest method of commercial property purchases for Australian expats.
• Full Doc application to purchase a commercial, there is only a very few lenders who will do a full doc. The issue with full doc application limited lenders, the interest rate could higher than lease doc rates and lot more paper work for everyone.

Some Australian banks and lenders specialize in expat loans, which can make the process smoother. Generally the interest rate for commercial loans for expats will be the same as ilocal Australian. Unless you need to do the application with a specialist lender due a bank or lender criteria/policy reason.

3. Tax Implications

Buying commercial property while living overseas means that Australian expats need to be aware of both Australian and foreign tax regulations.

In Australia, rental income from commercial properties is subject to taxation. This means that any income derived from the property, such as rent, will be taxed by the Australian Tax Office (ATO), and you’ll need to lodge a tax return.

Additionally, when you sell the property, you may be subject to Capital Gains Tax (CGT). However, Australian expats may be eligible for a CGT exemption under certain circumstances, particularly if they’ve lived in the property or meet the requirements for the “main residence exemption.”

From a foreign perspective, expats need to ensure they comply with their host country’s tax rules. This could involve declaring rental income or capital gains in their new country of residence. Depending on the jurisdiction, tax treaties between Australia and the expat’s host country may help prevent double taxation.

Summary for Tax;

• Highly recommend you find a expat tax expert, before you look at buying commercial or a residential investment property. Tax laws are always being adjust and talking to Australian before purchase will help to make sure you are keeping within the Australia Taxation rules.

4. Legal and Property Management Considerations

Purchasing commercial real estate requires significant due diligence. Expats should engage with a qualified solicitor or conveyancer who specializes in property transactions to guide them through the process. These professionals can help with:

• Reviewing contracts and terms.
• Ensuring compliance with local property laws.
• Confirming that all necessary approvals are in place, such as zoning permissions or council approvals.
• Understanding any specific legal obligations for property owners in Australia.

Another important consideration is property management. Expats who buy commercial property may choose to hire a local property management company to handle tenant relations, maintenance, and general management. This ensures that the property is well-maintained and income is generated without requiring the owner to be physically present in Australia.

Steps to Purchasing Commercial Property as an Expat

1. Research the Market: Familiarize yourself with Australia’s commercial property market, including current trends, yields, and potential investment opportunities.
2. Seek FIRB Approval (If Required): As an Australian expat, you will typically not need FIRB approval unless you plan on investing in a commercial property not intended for personal use. However, always confirm with a legal expert.
3. Secure Financing: Speak with an expat Finance broker who offer expat-friendly advise and understand the requirements for obtaining a mortgage while living overseas.
4. Engage a Solicitor and Property Manager: Ensure that you have a qualified legal expert to help with contracts and property management services to handle the day-to-day operations of the property.
5. Monitor Your Investment: Stay on top of market conditions, tax changes, and potential risks that may impact the performance of your commercial property investment.
6. Taxation advise; Alway seek taxation advise from an expert accountant in expats Tax rules, to make you aware of any changes to expats ATO rulings.

Conclusion

Purchasing commercial property in Australia as an expat is an achievable and potentially rewarding venture. With careful research, the right financial support, and professional legal assistance, Australian expats can successfully invest in commercial real estate while living abroad. While there are specific regulatory, financial, and tax considerations to keep in mind, these hurdles are by no means insurmountable. With the right approach, you can enjoy the long-term benefits of property ownership in one of the world’s most desirable real estate markets.