What are the FIRB rules for buying vacant land and building a home?

What counts as vacant residential land

Treasury's Guidance Note 6 says land is vacant residential land if the number of dwellings that could reasonably be built on it is less than 10, and it is not used wholly and exclusively for a primary production business. The number 10 comes from Regulation 19 under the Act.

Two points trip up buyers:

• A cleared block that used to have a house is not vacant land. Treasury says land that previously had a residential dwelling would generally not be treated as vacant residential land, because a new dwelling there would not add to housing stock. It is dealt with under the rules for established dwellings.
• Knocking down and rebuilding does not create a new dwelling. A single dwelling built to replace one or more demolished established dwellings is treated as established, not new.

Treasury's own example of a qualifying purchase is a block in a new subdivision that has never had a dwelling on it.

The standard conditions

If an application for vacant residential land is approved, Treasury says it will generally be subject to these conditions:

• the purchase price is no greater than the value specified in the approval;
• at least one residential dwelling is built on the land;
• all dwellings are completed within four years of the date of the notice of approval;
• evidence of completion goes to the Government within 30 days of the buyer receiving it, for example a certificate of fitness for occupancy or use, or a final occupancy or builder's completion certificate; and
• the buyer does not sell, transfer or otherwise dispose of the land before construction of all dwellings is complete.

Once the dwelling is built, there are generally no ongoing conditions on use, so the owner can live in it or rent it out. There is no limit on how many vacant land parcels a foreign person can buy for residential development. Treasury notes that the Treasurer can impose any condition needed to protect the national interest, so the conditions in a particular approval are what count.

A buyer can also hold their own residential land exemption certificate, which allows the purchase of one vacant title in the state named, up to the stated value, generally within 12 months. The same building conditions still apply to land bought under it.

How the four years work

Worked example. Suppose the approval notice is dated 10 March 2027. Four years from that date is 10 March 2031. Everything on the site, not just the first dwelling, must be finished by then, and the evidence sent in within 30 days of the buyer receiving it. If settlement takes several months, or the builder starts late, that time comes out of the same four years. The exact date and wording are in the buyer's own approval.

House and land packages appear in Treasury's guidance in two places. They are not a "development" for the purposes of a developer's exemption certificate (see the developer certificate guide), and the advertised price for the package is a reasonable measure of the consideration under Guidance Note 2. The guidance does not say how a package is classified under the vacant land conditions, so that is a question for the ATO or a conveyancer.

If the building is late or never happens

The ATO says it monitors compliance after approval. It regularly matches data with other agencies to detect non-compliance, sends reminders to meet approval conditions such as constructing a dwelling, and can issue infringement notices or penalties and issue disposal orders asking a foreign person to dispose of residential property.

Enforcement is not only theoretical. In a media release dated 29 September 2026, the ATO reported that the Federal Court had ordered a $508,000 civil penalty against a foreign owner who failed to complete a dwelling on vacant residential land within the four years required by the conditions of the approval. The same release says the ATO forced remediation of 217 breaches of the foreign investment rules in 2024-25, including the disposal of 111 residential properties. The release notes that the matter is subject to appeal by the investor.

The Act sets the ceiling. Contravening a condition of a residential land approval is a civil penalty matter, and Treasury's compliance guidance (March 2025 version) gives the maximum as the greatest of double the capital gain, 50% of the consideration, or 50% of the market value. On a $600,000 purchase, 50% of the consideration alone is $300,000. Contravening a condition is also an offence under section 87, with a maximum of 10 years' imprisonment or 15,000 penalty units, or both. These are maximums, set by the Act.

Treasury encourages anyone who thinks they may have breached the law to self-disclose and says lower penalties may apply when a breach is self-reported.

Asking for more time. Treasury's Guidance Note 2 says a foreign person can apply for a variation to a condition at any time, and is encouraged to do so as soon as they know they cannot comply. For a construction extension, the ATO's variation form asks for the current construction status, the project timeline and supporting documents such as building quotes or the development approval. The ATO says it considers variations case by case.

A standard variation fee is $31,300, but it is capped at the fee paid for the original application. For a block bought with a 2026-27 application fee of $15,600, the variation fee would be $15,600, not $31,300.

Fees, the vacancy fee and registration

Vacant land is charged in the same price bands as new dwellings. For 2026-27 that is $15,600 for $1 million or less and $31,300 for $2 million or less (see fees).

The ATO says no vacancy fee return is needed while the land is vacant and no dwelling has been built. Once a dwelling is constructed, a return is due for each new dwelling. The ATO says the first vacancy year starts on the occupation day, the first day the owner has the right to occupy, which for a new dwelling is the day a fitness for occupancy certificate is issued. If that dwelling then sits empty, the fee is double the application fee. For the block above, 2 x $15,600 = $31,200 a year. See the vacancy fee return guide and the vacancy fee page.

The property also goes on the Register of Foreign Ownership within 30 days of settlement. State surcharges apply separately, covered in state surcharges.

Frequently asked questions

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