Changes to CGT for Those Living Overseas

ATTENTION Expatriates who own residential Australian property

On 12 December 2019, the Government introduced new legislation affecting the main residence capital gains tax (CGT) exemption for Australian tax non-residents.

What does this mean for you?

If you are a non-resident Australian living overseas and you sell your property you currently claim as your main residence after June 30, 2020, you will no longer be entitled to the CGT exemption. This also means that if you sell your property after this time, you will be required to pay tax on the capital gain accumulated for the entire time the property is owned.

There are a few limited exceptions

• For dwellings owned before May 9, 2017 the properties can be sold on or before June 30 2020 to still be eligible for the CGT exemption.
• If you are a foreign resident for 6 continuous years or less, you can continue to access the main residence exemption
• If you have to sell the property as a result of a “life event” during the period of foreign residency (terminal medical condition, death of spouse or child, divorce or separation etc.), you may still have access to the main residence exemption
• The new law partially abolishes the “absence rule” as Australian tax non-residents will no longer be able to benefit from this rule. However, individuals who resume Australian tax residency prior to selling their main residence may still be able to benefit from the “absence rule”.

A Foreign Resident means someone who is not a tax resident of Australia and includes Australian citizens and permanent residents who are foreign residents.

Who should I speak to?

We strongly recommend you discuss with your accountant your own personal circumstances and how this Bill affects you and your property portfolio.

If you are thinking you would like to try to sell your property prior to June 30 this year, give us a call or shoot us an email and we can provide you with the relevant information and timelines to try and achieve this.

Are you wanting some more information on what this new Bill could mean for you or who you should discuss your situation with? Send me a message HERE, and I will send through some information to assist.

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Links to other information on the removal of the main residence exemption for Australian tax non-residents

Foreign residents and main residence exemption LINK HERE

PwC TaxTalk Alert: Removal of the main residence exemption LINK HERE

Removal of CGT main residence exemption for non-residents LINK HERE

Change in Capital Gains Tax Exemption All Australians LINK HERE

Removal of capital gains tax exemption for foreign residents LINK HERE

Removal of the Main Residence Exemption for Foreign Residents LINK HERE

Australia introduces legislation to remove main residence exemption LINK HERE

Controversial removal of CGT main residence exemption for foreign residents LINK HERE

Capital gains tax changes for foreign investors LINK HERE