Thinking of selling your AUSTRALIAN property in 2025? New CGT Rules for Expats Explained.
With Chinese New Year late January, many Australian expatriates returned to Australia including Sunshine Coast (Noosa) where my wife and I spent the last couple of weeks.
Whilst in Noosa I caught up with two expatriate couples, one HK based and one Singapore based, planning on returning to Australia over the next 12 months. Both have worked in Asia for 5 plus years.
One of the expats was planning to sell his former principle residence while still in Asia and upgrade on his return to Australia next year.
As flagged in a post last year there is a very different tax outcome for an Australian expatriate selling his Australian property as a non resident and selling as an Australia tax resident.
An updated post below.
If you’re an Australian expat planning to sell your property back home in 2025,recent tax changes may impact you.
As of 12 December 2019, all non-residents—including Australian citizens—can no longer claim the main residence Capital Gains Tax” CGT” exemption when selling their former family home while overseas.
Here’s what you need to know:
Main Residence CGT Exemption: If you sold property after 30 June 2020 as a non-resident, you won't qualify for CGT exemption. There’s an exception if certain life events occurred within six years of non-residency (e.g., death, divorce, or a terminal illness).
Withholding Tax: Purchasers of Australian property from non-residents must withhold 15% of the sale price. This is credited against the seller’s potential CGT liability.
Absentee Rule: Even if you move overseas, you can still treat your home as your main residence for CGT purposes for up to six years, provided you don’t claim another home as your primary residence.
Case Study
The Australian Treasury web site provided the following example regarding the proposed new Capital Gains Tax rules for non-residents selling their main residence.
The key message in the ATO case study below, if you reside in your Australian property, then as an expat rent property for under 6 years (even multiple rental periods of 6 years interspersed with a period residing in the property) two tax scenarios when you sell’
Sell principal residence returning to Australia as a tax resident NO TAX
Sell the property as an Australian nonresident, taxation on the full gain.
Details below.
ATO Case Study - Facts
Anita acquired a dwelling on 20th February 2003, moving into it and establishing it as her main residence as soon as it was first practicable to do so.
On 15th August 2021, Anita signs a contract to sell the dwelling and settlement occurs on 12th September 2021.
Anita used the dwelling as follows during the time she owned it.
Residing in the dwelling from when she acquired it until 1st October 2007.
Renting it out from 2nd October 2007 to 5th March 2011 while she lived in a rented home in Paris as a Foreign Resident (assume the absence provision applies to treat the dwelling as her main residence).
Residing in the dwelling and using it as a main residence from 6th March 2011 until 15th April 2012.
Renting it out from 16th April 2012 until 10th June 2017 while she lived in a rented home in Hong Kong as a Foreign Resident (assuming the absence provision applies to treat the dwelling as her main residence).
Residing in the dwelling from 11th June 2017 until it was sold. The time of the CAPITAL GAINS event “CGT” event for the sale of the dwelling is the
Time the contact of sale was signed, that is 15th August 2020
Critical Issues
As Anita was an Australian resident for taxation purposes at that time (as she had re-established her Australian residency) she is entitled to the full main residence exemption for her ownership interest in the dwelling.
This example shows that although Anita lived overseas for a period, she was still entitled to the main residence CGT exemption when she sold it, as she was an Australian resident for tax purposes at the time of sale.
Had Anita sold the property before returning to Australia, then she would not be entitled to any CGT exemption and would have paid full CGT on the sale of property. Furthermore, she would have been denied the 50% CGT discount concession from 9 May 2012.”
Best wishes
Regards,
Dale Hoy
m) +61 419 364 994
Here are 3 ways I assist Australian expats plan their repatriation.
1 Download my checklist on the 7 key areas for Australian expatriates to start exploring with their advisor.
2 Register for upcoming Round Table- Repatriation Ready: Tax Insights for Australians Returning from Asia" Wednesday 12th March, 2025 at 7-7.45 pm HK/Singapore time/8.00pm Tokyo time.
3 Book a private conversation with me at your convenience.
