Contributed by Karina Foo
For decades, Australian real estate has lured foreign investors with its promise of stability and steady growth. Even in 2025, cities like Sydney and Melbourne boast 3-5% annual capital appreciation, outpacing many global markets. Yet, for Malaysians eyeing these opportunities, the game has changed. Stricter taxes, retroactive audits and an upcoming temporary ban on foreign purchases of established homes have transformed the landscape. Success now hinges on balancing ambition with compliance—a lesson some learn the hard way.
“Investors often fixate on purchase prices,” said TJD Accounting Services international taxation accountant Dominic Murphy. “But in 2025, the real challenge is navigating compliance. Get it right and Australia remains a golden opportunity. Get it wrong and penalties swallow returns,” warned Murphy, whose firm has advised close to 2,000 foreign investors for 40 years.
The New Rules
From April 2025, foreign buyers—including Malaysians—face a temporary ban on purchasing established homes. The focus has shifted to:
- Newly built dwellings (never occupied)
- Vacant land (must be built within four years)
- Off-the-plan apartments
The Foreign Investment Review Board (FIRB) fees, standardised nationwide, now reflect stricter oversight. For Established homes, the FIRB fee is A$42,300 (A$1=RM2.77), New builds are A$28,000 and vacant land is A$13,200 (according to the FIRB 2025 Guidelines).
Delays are common. “A client bid on a Sydney penthouse without approval last year,” Murphy recalled. “The FIRB took 52 days to process her application—she lost her S$50,000 (RM166,034.77) deposit . Always secure approval before making offers.”
Stamp Duty surcharges: State-by-state costs
Foreign buyers pay premium stamp duty, with updated 2025 rates as foreign surcharges:
- Victoria: 8%
- New South Wales (NSW): 9% (up from 8% in 2024)
- Queensland: 8%
- South Australia: 7%
Example: An A$800,000 Brisbane townhouse incurs A$64,000 in foreign surcharges—double the A$32,000 paid by locals. "These costs catch many off guard," Murphy warned. "A client nearly defaulted on her loan after underestimating NSW's 9% surcharge."
Tax traps: The 15% withholding rule
Australia’s 15% withholding tax on property sales applies to all non-residents. To avoid this, sellers must obtain a Clearance Certificate—but eligibility requires up-to-date tax filings.
“Secure an Australian Tax File Number (TFN) immediately after purchase because the Australian Tax Office (ATO) requires property owners to file tax returns from the year they bought the property, regardless if you’ve made capital gains or losses.”
“One client delayed filings for five years,” Murphy shared. “When he sold his home last month, the ATO withheld A$210,000 of his A$1.4M sale. It will take him eight months to reclaim those funds after back-filing returns and the tax office didn’t make it easy.”
Case study: The Kuala Lumpur executive
Background: A Malaysian tech CEO purchased a Melbourne off-the-plan apartment in 2018 for A$550,000 as part of his retirement strategy.
Steps taken:
- FIRB approval: Applied during the pre-construction phase, securing approval in 33 days.
- TFN application: Filed within a month of settlement, enabling deductions for loan interest and strata fees.
- Tax compliance: Partnered TJD Accounting Services to lodge annual returns, tracking rental income and land tax.
- Outcome: Sold in 2022 for A$600,000, avoiding the 15% withholding tax via a Clearance Certificate.
"Proactivity saved him A$90,000 in withheld funds," Murphy noted. "While the capital gain was modest at A$50,000, he offset A$7,500 in capital gains tax against prior losses from a Brisbane investment."
Lesson: "Start compliance early. Even if the property appreciation is slow, proper tax management can protect your gains. The ATO wants a consistent paper trail, regardless of profit margins."
Land tax and data-sharing
Non-residents face annual land tax and absentee surcharges:
- Victoria: 4% on land value >A$50,000
- NSW: 4% surcharge + 2% land tax
Australia’s Tax Avoidance Taskforce recovered A$92M from 1,200 foreign owners in 2024 through retroactive audits. “The ATO shares data with state revenue offices,” Murphy explained. “One client was flagged because his agent used a Melbourne address—they traced his FIRB application to Kuala Lumpur. That happens more often than we hope and it proves that no one can get under the radar”
Why investors still choose Australia
“Smart investors target new developments and understand how to interpret the data,” said Murphy. “One client’s Brisbane duplex, bought off-the-plan in 2020, is now valued at A$850,000—a 20% gain post-surcharges.”
Australian real estate continues to attract Malaysian investors, bolstered by strong property rights and promising market conditions. In 2024, Australia ranked 3rd globally for property rights protection, according to the International Property Rights Index.
Adding to the appeal, national vacancy rates remain low at 1.7% indicating strong rental demand. This combination of legal stability, capital growth potential and rental opportunities makes Australian property an attractive option for Malaysian investors seeking diversification and returns.
If investing in Australian Property is on the cards for you, ensure you do the following:
- Pre-Compliance: Secure FIRB approval before bidding.
- Get your TFN: File within 30 days of purchase.
- Budget for Surcharges: Add 20-25% to acquisition costs.
- Partner with locally based accountants (Australia) who deeply understand foreign taxation requirements for property ownership.
Australia’s property market still rewards the prepared. For Malaysians, the key is balancing compliance costs with long-term gains. As Murphy advised: “Treat surcharges as tuition fees for accessing one of the world’s safest markets for now.”
Karina Foo is the marketing consultant of TJD Accounting Services and is based in Australia. E-mail: karinamei.foo@gmail.com
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