As Australians living abroad, we often grapple with the question of when to buy property back home. While the complexities of purchasing from overseas might tempt you to wait until your return, this decision could significantly impact your long-term financial position.

Let's explore the real implications of buying now versus waiting, including critical considerations about tax, ownership structures, and planning for non-resident status.

The Current Landscape

The Australian property market continues to demonstrate remarkable resilience and growth potential, with major banks forecasting price increases between 5-8% across capital cities in 2025 and 2026. For expats earning in foreign currencies, this creates both opportunities and challenges that require careful consideration.

Understanding Tax Implications

As a non-resident for tax purposes, you'll face different tax treatments that significantly impact your investment. Non-residents start paying tax from the first dollar earned in Australia, with no tax-free threshold. The current non-resident tax rates start at 30% and can go up to 45%, making tax planning crucial.

Many Australian expats baulk at the tax rates assuming incorrectly that they are too prohibitive and therefore they should invest in other assets classes such as shares or bonds, but with careful tax planning, this can be managed very effectively.

A key consideration is that non-residents can't access the 50% Capital Gains Tax (CGT) discount that residents enjoy. This means when you sell your property as a non-resident, you'll pay CGT on the full capital gain, making your ownership structure decision even more critical.

Ownership Structures and Planning

Choosing the right ownership structure can significantly impact your tax position and financial outcomes. Options include:

• Individual Ownership: The simplest structure but potentially not the most tax-effective for non-residents.
• Company Structure: Can provide some tax advantages but loses access to the CGT discount even if you become a resident later.
• Trust Structure: Offers flexibility and potential tax benefits, particularly if you plan to return to Australia, but requires careful setup and ongoing management.

Buying With a Non-Citizen Spouse

If you're considering purchasing with a non-citizen spouse, additional complexities come into play. Your spouse may be classified as a foreign person under Foreign Investment Review Board (FIRB) regulations, potentially triggering:

• Additional stamp duty surcharges (typically 7-8% depending on the state)
• FIRB approval requirements
• Higher lending requirements from banks
• State-specific foreign investor regulations

The Power of Acting Now

Beyond these structural considerations, the most compelling reason to consider buying while overseas relates to leveraged growth and the real cost of delay. A property valued at $750,000 today requiring a $150,000 deposit could cost $842,000 in just two years at 6% annual growth. This means you'll need not only a larger deposit but also a bigger loan, potentially pricing you out of your desired market.

Navigating Lending and Finance

Lenders assess foreign income differently, often applying a haircut of 20-40% to your income for serviceability calculations. However, many major banks still offer competitive rates to Australian expats, typically requiring:

• A larger deposit (20-30%)
• Proof of stable foreign income
• Evidence of your right to work overseas
• Foreign currency income from approved countries

It’s important to ensure that you have a great mortgage broker in your corner who is familiar with working with Australian expats. This way you can ensure you’re getting the right deal and borrowing effectively whilst an Australian expat.

Building Your Support Team

Success in remote property investment relies heavily on having the right support network. Essential team members include:

• A Tax Accountant: Vital for structuring your purchase correctly and understanding ongoing tax obligations both in Australia and your current country of residence.
• A Mortgage Broker: Look for one experienced with expat lending who understands the nuances of foreign income assessment.
• A Buyer's Agent: Your eyes and ears on the ground, crucial for remote purchasing and their detailed knowledge, scenario modelling tools and capability, and inside knowledge of key areas across the country.
• A Property Manager: Essential for handling day-to-day operations and ensuring compliance with local regulations.

Looking Forward

While buying property as an expat comes with complexities, the cost of waiting could substantially outweigh the challenges of purchasing and managing from abroad. The Australian property market has historically rewarded long-term investors, and with current market conditions and forecasts, this pattern shows little sign of changing.

Remember to consider both the immediate and long-term implications of your purchase. Think about:

• Your eventual return plans to Australia
• Potential changes in tax residency status
• Property management while overseas
• Currency fluctuation risks
• Long-term investment goals

The combination of continued market growth, the power of leveraged investing, and the risk of being priced out of your desired market make a compelling case for acting sooner rather than later. While the decision ultimately depends on your personal circumstances, don't let the complexities of buying as an expat overshadow the potential opportunity cost of waiting.

The future you might thank you for taking action today rather than waiting for the "perfect" moment that may never come. With proper planning, professional advice, and the right team supporting you, the challenges of purchasing property as an expat can be effectively managed, while the benefits of entering the market sooner could prove invaluable to your long-term financial position.

Embark on your property investment journey with Ally Property Group, your trusted ally in Australia's real estate market. Our expert advisers are dedicated to crafting personalised investment strategies for Australian expats and residents alike, aiming to enhance your portfolio and maximise returns. Start building your wealth with Ally Property Group, where strategic insights, analysis and modelling leads to prosperous investments.

We’re more than just property advisers. As Australian expats ourselves, we've navigated the intricate world of property investment both at home and abroad. With a legacy rooted in financial services, we offer a holistic, transparent, and strategic approach, ensuring you're equipped with the knowledge and confidence to make informed decisions.

Book an obligation-free, complimentary consultation here today.

General Information Warning: The information contained herein is of a general nature only and does not constitute in any way, personal advice. You should not act on any recommendation without considering your personal needs, circumstances, and objectives. We recommend you obtain professional property investment advice specific to your circumstances.